Piyush Goyal’s big bonanza: ₹16 a day to the middle class & the farmer     

Interim Finance Minister Piyush Goyal tried hard but delivered little. The farmer would gain Rs 500 per month or ₹17 per day through his budget proposals but the government has already taken a lot more away through years of regressive taxation. No one knows where the money is coming from but that is a discussion that could wait.

The Pradhan Mantri Kisan Yojna is undoubtedly the biggest announcement in this budget but it is unfortunately too little, too late for the farmer. The government has promised ₹6,000 per farmer in three tranches through the year. While this might be a tacit acknowledgement that their policies have not worked, an additional income of ₹500 per month would mean nothing for the farmer, considering the rise in input prices.

The average income of a farming household in India is ₹77,112 per annum which comes down to ₹6,426 per month. An additional income of ₹500 per month would be a welcome addition but the government has taken far more away over the last few years.

The price of DAP has increased from ₹281 in 2014 to ₹295 now. Urea has gone from ₹1125 to 1450, the size of the bag has reduced from 50 kg to 45 kg. Per kg and the rate of urea has gone up from ₹22.50 to ₹32.22, a jump of 43.2%. There is more bad news in the pipeline as fertilizer prices are expected to go up further by 5-26% and if this happens, the ₹500 per month gain would mean very little.

Diesel is another key component for the farmer and the farmer has paid heavily over the last five years. Crude prices remained half of what they were during the UPA years but the diesel prices in Ambala, as a test case, have gone up from ₹55.13 per litre in May 2014 to ₹62.56 now, a jump of Rs 7.43 or 13.5%.

In addition to this, the average Indian farmer has a debt of ₹47,000 and at an interest rate of 6%, they pay ₹2,820 per annum so this scheme leaves very little for farmer, after paying the interest, forget repayment of the principal loan amount. The scheme could well end up paying for the premium paid by the farmer under the Pradhan Mantri Fasal Beema Yojna where the average premium have gone up to ₹5,135 per farmer.

The farmer was expecting a lot more from the Union government at the end of the term but what he has received is ₹17 per day, no loan waivers, no schemes to raise farmer income: just ₹16 a day.

The middle class may be celebrating the increase in the baseline of tax to ₹five five lakh but Mr Goel is essentially providing a relief of ₹18,000 Crore to three Crore people, who were paying Income Tax at the rate of just 5% up to annual income of Rupees five lakh.

It works out to ₹6,000 per annum or ₹500 per month of ₹16 and some change per day. That may not be enough to buy a family half a litre of milk a day.

The government has inflicted massive damage on the middle class due to high unemployment and high prices of petroleum products. The union government has earned more than Rs 10 lakh crore from the middle class over the last five years through additional taxes on diesel and petrol.