The next budget will focus on farmers, jobs in mostly rural areas and infrastructure while making every attempt possible to follow a path of fiscal prudence.
This means that the government may increase funding for the agricultural sector in the budget for the upcoming fiscal year 2018-19. This move of the BJP government is supposed to gather political support for the party in the countryside ahead of elections.
Government of Prime Minister Narendra Modi’s won the election in his home state of Gujarat this week, but it was under the onslaught of discontent that was fuelled by falling incomes from farms and a hiking unemployment.
In 2018 and 2019, there will be eight more state elections in the country. All of these will lead up to a national election in the year 2019. On February 1 2018, Finance Minister Arun Jaitley is most likely to present his last budget, for the 2018-19 year that begins on April 1 2018.
Annual farm growth has decreased to 1.7 % in the previous quarter, mainly because of lower prices and output. The economic growth on the other hand has accelerated to 6.3% after growing at a 3-year low of 5.7 % in the same quarter.
The government can’t afford the anger of farmers anymore & from now on, will try to boost the economic growth and supply more funds to the agricultural sector. Arun Jaitley has signalled that his priority in this budget will be allocating more funds for rural and infrastructure sectors. According to another source, PM Narendra Modi would like to achieve 7.5 % to 8 % annual economic growth before the election campaign begins.
In the next fiscal, higher procurement prices will be offered for different crops following the fall in output this year. Apart from this, there will be extensive tax reforms, concerning the corporate demand to lower tax rates. By December 15, the government had raised almost $8 billion from the sale of shares in companies, which is more than 70 % of the full-year target. PM Narendra Modi, after pushing tax reforms like the GST, cuts in subsidies for the states and allowing more FDI in new sectors, now faces a challenge to create more jobs for millions of unemployed youths.
The allocations for farm and rural development ministries could be hiked in the next fiscal year by at least 20 %. The upcoming budget of 2018-19 is likely to enhance allocations for the transport and railways ministries by 1/4th. That is almost 1.5 trillion rupees. Finance ministry could also defer some expenses to the next fiscal year to maintain the fiscal deficit of current year at 3.2 % of the gross domestic product.
It is still unclear whether the deficit target for the current fiscal year would be met or not, but a hopeful view could be taken for next year’s target of 3 % of GDP. It is certain, however, that Prime Minister Narendra Modi will take the final decisions on the upcoming budget.