Interim budget expected to be populist one, with sops for all

As the budget presented on February 1 will be the last one by the Modi government in this term, it will be termed, as per the existing convention of an outgoing government, an interim budget.
The caveat lies in whether the budget will follow the norms of an interim budget or whether it will have ingredients of a full-fledged budget, sans the economic survey that will be presented by the freshly-elected government in July.
Before leaving for the US for medical treatment, Finance Minister Arun Jaitley had indicated the possibility of the latter, and that the budget may not merely be a vote-on-account one.
“The convention has always been that the election year budget is an interim budget,” Jaitley said on January 17, adding, “and ordinarily, there should be no reason why we should move away from the convention. But the larger interest of the economy always dictates what goes into the interim budget and that’s something which cannot be discussed or disclosed at this stage.”
The government grapevine suggests that the budget will be loaded with big-ticket announcements, with a little bit of something for people belonging to different economic strata, across sectors. With the Lok Sabha elections looming on the horizon, it is expected to border on populist measures.
A major challenge is to leave very little room from criticism from opposition to seep in. The big questions are: How strong a blow is the government ready to endure on the fiscal deficit front? Will it allow it to gallop from the current 3.3 per cent of the GDP to 4 per cent or above?
Given the distress in the agriculture sector, sops for farmers are expected. The budget is also expected to reflect the recent Cabinet note by the Agriculture ministry that addressed income deficit syndrome of small and marginal farmers. It proposed various steps, including a financial package and interest waiver for timely crop loan re-payers.
It is speculated that — on the lines Raythu Bandhu Scheme of Telangana — the government will offer relief between Rs 4,500 to Rs 8,000 per acre annually to small and marginal farmers who have up to 5 acres of land.
Grievances of the salaried class are also expected to be addressed. The 2014 budget allowed for an additional tax-free income of Rs 50,000, but last year’s budget reintroduced standard deduction of Rs 40,000 in place of existing exemption for transport allowance and reimbursement of miscellaneous medical expenses.
The traders’ lobby has been demanding several sops, including Accidental Insurance of Rs 10 lakhs to those registered under GST, subsidy for the purchase of computers and allied goods to upgrade existing business formats, etc.