Budget 2018 is not populist but popular, says Union Finance Minister Arun Jaitley in an exclusive interview to Zee Media. He also said that he has maintained a fine balance between maintaining fiscal challenges and serving social purposes.
1) What were your thoughts while preparing for this year's Budget?
This year's Budget was different. It was a challenging budget in terms of managing finances. Yet we managed to maintain a balance between generating jobs and keeping an economy strong. We have introduced many structural reforms. I believe gains from these structural reforms will consolidate in coming two years. The services sector is growing at 8-9 percent, manufacturing has also picked up. We are giving thrust to infrastructure sector too. We couldn't have limited us to that level. Whatever we did, we kept analysing it. We realised agriculture has been our weakness, that is why Budget 2018 focused on rural India.
2) Industry leaders and market participants didn't call it populist, but not so much popular too.
I believe people at large accepted the Budget 2018. I would call it a popular budget, not populist. Financially, it was a challenging budget. We only had 11-month revenues, growth picked down due to structural reforms. Yet we managed. I made sure to provide tax benefits to MSME sector too. I managed to balance the economy while serving the social purpose too.
3) Middle-class taxpayers appear to be disappointed with the Budget 2018. On the one hand, they received a standard deduction, on the other, medical and transport reimbursements were taken away.
No, both are not equal. I understand salaried class pays tax honestly. Therefore, in my every budget, I have given something to them. I reduced income tax to 5 percent for the lowest tax bracket — Rs 2.5 lakh to Rs 5 lakh. I increased deduction under Section 80-C to Rs 1.5 lakh from Rs 1 lakh, and for housing loans to Rs 2 lakh. Transport allowance used to be Rs 800. I increased it to Rs 1,600. For medical allowance, people produce fake bills. That is why I abolished these to just provide a standard deduction. This deduction is Rs 8,000 crore. This relief is just for this year. If you look at last four years, I have taken enough measures for salaried class. Disposable income in their pockets is necessary for the economy too.
4) Don't you think ideally the income tax limit should be increased?
I used to think so before joining the ministry, but what I have observed is that a good section of people somehow manages to file returns, yet do not pay any taxes. I had to address this issue. I had the challenge to choose between narrowing the tax base and keep offering relief to honest taxpayers. Then, I thought I should gradually increase the limit, but at the same time making way for other kinds of tax relief too. Now, someone earning Rs 5-7 lakh has to just pay nominal tax. I assure I'll keep reducing this burden.
5) Custom duty has been increased on imported items such as iPhone, and watches. These items are important for the middle-class.
We had been decreasing Custom duties for the last few years. We made an exception this year with the motive to push manufacturing of these items in India.
6) Will the Minimum Support Price (MSP) 1.5 times of the cost be inflationary?
The roadmap that I see is if the market price is higher than MSP, it is not worrisome, but if market prices slip below MSP, then the state governments will make sure to compensate farmers' losses. I believe the impact of MSP on inflation will be limited.
7) The most ambitious plan of the Budget 2018 is Ayushman Bharat programme. Is it the first step towards social security?
Gradually, in a disjointed way, we provided relief to poor by offering subsidies on food, cooking gas, housing, electricity, education in the government school etc. Now, we have taken this big step to provide healthcare coverage to 10 crore poor families.
8) By when do you expect to implement this scheme?
We target to roll it out by the next financial year.
9) While market participants accepted LTCG is reasonable, but they are anxious why STT has not been removed?
STT has been there with STCG. Now it will exist with LTCG too. We have offered concessional rate. We exempted small investors by capping the profit at Rs 10 lakh. I believe creamy layer will have to pay this tax. They can do that.
10) Can we expect indexation benefit in coming years?
People are coming up with suggestions. I would say it has just been launched. We'll see how it progresses, and then I'll take a call.
11) Will the fuel prices come under GST?
I cannot comment on that. I would want it too, but a good chunk of state revenues depend on fuel. For them, Forgoing this will not be easy.
11) After a record divestment this year, why the target for next year is less, given divestment of Air India is also lined up?
Rs 80,000 crore is not conservative. We pushed the target higher this year because our non-tax receipts decreased. This much is not needed each year.
12) Can elections be held early this year?
Speculations go on. I don't see it happening.