Budget 2018 | Revitalising the rural economy: Renu Sud Karnad

2017 was in many ways a significant year for the Indian economy, as it was impacted by many structural reforms such as demonetization playing out fully, GST, insolvency resolution, RERA for the real estate sector, etc. In the backdrop of those developments, Mr Jaitley's Fifth Union Budget was arguably presented in a tough environment, as he seeks to create jobs, boost growth, address agriculture sector while sticking to fiscal prudence.

To that end, Budget 2018 is a balanced budget that focuses on fiscal discipline as well as looks at the strengthening rural economy, infrastructure development and social needs. By hiking the agricultural credit target to Rs 11 lakh crore, Mr Jaitley aims to increase farmer's income by 1.5 times. He has also allocated mammoth budgetary support of Rs 5.97 lakh crore, giving impetus to infrastructural development such as roads, railways, civil aviation and smart cities.

A flagship National Health Protection Scheme to cover 10 crore poor and vulnerable families in the country, or about 50 crore beneficiaries, with a cover of Rs 5 lakh per family per year for secondary and tertiary care hospitalisation is also a welcome move.

Fiscal deficit of 3.5% for FY 2017-18 and 3.3% of the GDP for FY 2018-19 has been in the context of not compromising on growth. It is definitely a bold step, as allocating more resources for economic reforms will reap more medium to long term benefits.

The Budget continues to provide impetus to the housing sector, which has been a key focus area of the government ever since they came to power. Having a dedicated affordable housing priority sector fund under the National Housing Bank (NHB) is definitely a laudable step and will help low-income borrowers and thereby, the entire sector. With the target of building 31 lakh homes in urban areas and 51 lakh in rural areas in 2018-19 under 'Housing for all by 2022', government intends to deliver 1.2 crore houses. This is indeed a noteworthy step and will lead to a huge increase in housing in the country. Provision of Section 43CA, 50C and 56(2)(vii) being amended to allow 5% of sale consideration in variation vis-a-vis stamp duty value, though not enough, is still a welcome move.

Budget 2018 has proposed several revolutionary steps to boost the quality of education across pre-nursery to higher education. Addressing the issue of quality upgrades required for the teachers across India, the budget rolled out integrated BEd programmes. Also with an aim to improve digital footprint, the budget focuses to move from traditional blackboard to digital boards and expanding delivery of education across levels.

Budget also gave women a reason to cheer. Providing Rs 3 lakh crore under the Mudra Yojana to encourage them to start new ventures, free gas connections for women under the Ujjwala Yojana, reducing contributions from women employees in EPF from 12% to 8% are very noteworthy.

Overall, the budget will help in creating a favourable environment for sustainable growth in agricultural sector while laying strong emphasis on healthcare, education and infrastructure sectors respectively.

Renu Sud Karnad
Managing Director, HDFC