An underwhelming budget: Third Modi government's first full financial plan

The much-anticipated first budget of the third Modi government failed to deliver significant relief to the common man. Finance Minister Nirmala Sitharaman's presentation seemed more like a continuation of her interim budget from February, and despite this being her seventh consecutive budget presentation, it fell short of expectations for many, including opposition-ruled states.

The budget's allocation of substantial projects to Bihar and Andhra Pradesh is a clear indicator of the political pressures within a coalition government. Both states demanded special status and packages in exchange for their support, which were granted generous packages even without the special status designation. This strategic allocation aims to keep these states aligned with the central government. In stark contrast, states like Kerala, which were hopeful for special packages and project assistance, were left disappointed.

The budget presentation began with optimistic figures highlighting economic growth, reduced inflation close to 3%, and a narrowed fiscal deficit. However, these achievements were overshadowed by a lack of concrete measures to address rising prices and unemployment. The extension of the Prime Minister's Poverty Alleviation Scheme for another five years and increased allocation to sectors like agriculture, small and medium industries, and infrastructure aim to create more employment opportunities, projecting job creation for one crore people over five years.

Agriculture received a significant boost with an allocation of ₹1.52 lakh crore and new initiatives to increase production and promote eco-friendly farming practices. Rural development was also a priority, with ₹2.66 lakh crore earmarked for this sector. Additionally, ₹11 lakh crore was allocated for basic development, with new projects in tourism and a plan to build three crore houses under the Pradhan Mantri Awas Yojana.

The budget emphasized skill development, with schemes benefiting four crore graduating students and incentives for new entrants, including a ₹15,000 stipend in three installments. The Mudra loan limit was increased from ₹10 lakh to ₹20 lakh, aiming to support self-employment and small industries. However, the Employment Guarantee Scheme's allocation remained unchanged at ₹86,000 crore, disappointing many who expected more substantial support.

While the salaried sector saw marginal changes in income tax rates, with minor relief for those earning up to ₹10 lakh, the budget primarily favored corporates and foreign companies with new tax benefits. The standard deduction increased from ₹50,000 to ₹75,000, and family pension exemption rose from ₹15,000 to ₹25,000. Despite these changes, the total benefit to income tax payers was limited to ₹17,500.

Other notable proposals included a new solar power project for one crore houses, a subsidy scheme for roadside markets and food stalls, and corporate internships with a ₹5,000 stipend. Interest-free loans totaling ₹1.5 lakh crore for states were announced, benefiting many but notably excluding states like Kerala from substantial aid packages. The reduction in import duty on certain products, including cancer drugs, is expected to bring some relief to consumers.

Despite the budget's aim to generate over ₹33 lakh crore and stimulate various sectors, it falls short of the country's rapid growth needs. Many critical details were buried in the budget documents rather than highlighted in the speech, which was notably brief at just one hour and 25 minutes. The absence of any mention of the railway budget further highlighted the neglect of state demands related to railway development. Overall, the budget's mixed signals and selective allocations raise questions about its effectiveness in addressing the broader economic challenges facing the country.