President's Address Hints at Economic Bonanza for Poor in Union Budget?
President Pranab Mukherjee’s address to Parliament dropped hints that the government is likely to hike government spending on the poor and vulnerable sections of society in the Union Budget slated to be presented on Wednesday. While increased government spending would be a politically prudent move for the BJP given the impending polls to five state assemblies, it would mean the fiscal deficit target would have to be ignored for the time being.
File photo of President Pranab Mukherjee. (PTI photo)
New Delhi: President Pranab Mukherjee’s address to Parliament dropped hints that the government is likely to hike government spending on the poor and vulnerable sections of society in the Union Budget slated to be presented on Wednesday. While increased government spending would be a politically prudent move for the BJP given the impending polls to five state Assemblies, it would mean the fiscal deficit target would have to be ignored for the time being.
"At the core of all my government's policies is the welfare of the poor, Dalit, downtrodden, deprived, farmers, labourers and the young people... My government is guided by the Antyodaya philosophy of Pandit Deendayal Upadhyaya. Financial inclusion is key to poverty alleviation,” he said on Tuesday.
- An unprecedented 26 crore plus Jan Dhan accounts have been opened
- To take the banking system to the doorstep of the poor and the unbanked, the Indian Postal Payment Bank has been started
- Over Rs 2 lakh crore has been provided through 5.6 crore loans sanctioned under Pradhan Mantri Mudra Yojana
- Over 1 lakh bank mitras appointed
- Under the Antodaya Yojna, we aim to empower women particularly from deprived sections
- Over 16,000 crores have been made available to self-help groups
- My government has helped poor through housing schemes, clean water and green energy initiatives
- Poor sanitation weakens the economy of the poor households
The buzz is that the Budget will present an economic bonanza to the poor and deprived sections as a “reward” for being patient through the demonetisation exercise. Politically, this would also help the BJP to shore up support in states going to assembly polls in February, most importantly, Uttar Pradesh.
This strategy also complements what many economists are saying, that government spending will have to pick up the economic slack now that private consumption, investments and exports are flat or declining. This runs the risk of increasing the fiscal deficit.
Last year, Arun Jaitley decided to stick to the path of fiscal consolidation and announced that government finances would adhere to a fiscal deficit of 3.5% for FY 2016-17 and 3% for FY 2017-18. However, increasing its spending will mean that the government will have to put aside the target of 3%. The NK Singh committee recommending a fiscal deficit range could give the government a loophole to set aside the Financial Responsibility and Budget Management (FRBM) Act for the time being.
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