NEW DELHI: Union Minister Piyush Goyal, who is presenting the interim budget, said a "PM Kisan" programme would provide direct income support for small farmers, in one of its widely anticipated announcements ahead of the national election, due by May. It is the last chance for the ruling BJP to cover its bases after it lost three major states in last year's elections to rival Congress. "India is solidly back on track. We have created the foundation for growth and prosperity for all people, and create a new India by 2022," Mr Goyal said. The government is said to consider a cash handout and a monthly income programme for farmers even though it will cost the exchequer amid slowing growth and shrinking revenue collections. Tax relief proposals may also be announced. On Thursday, the government went into damage control mode as a yet-to-be-released report said unemployment was at a four-decade high in 2017-18.
"The government has made a historic plan called the PM Kisan programme. Those small farmers who have less than two acres will get a support of Rs. 6,000," Piyush Goyal said. "It will be transferred directly to the bank accounts of farmers in three instalments of Rs. 2,000," he said. He announced an allocation of Rs. 75,000 crore for the scheme.
The government is expected to ease the fiscal deficit target from 3.3 per cent of GDP for 2018-19. The centre is likely to miss its target for fiscal deficit - which occurs when government revenue falls short of its expenditure - for the current financial year. Any upwards revision would mark the third consecutive deviation from the fiscal consolidation roadmap. "Unlike the last government, our government broke the back of back-breaking inflation," Mr Goyal said.
The government's GDP growth projections for the coming years will be watched closely by economists. The government on Thursday evening revised upwards its growth estimates for the two years since the notes ban -- 2017-18 and 2016-17 -- to 7.2 per cent and 8.2 per cent. Its target for GST (Goods and Services Tax) collections will also be monitored. The government, which aimed to achieve GST collections worth Rs. 12.9 lakh crore in 2018-19, might have to lower its GST revenue target for the coming year.
The government is also expected to announce a further increase of about 10 per cent in the farm credit target. The target for 2019-20 is expected to be a record Rs. 12 lakh crore. In the last Budget, the government had increased the farm credit target by 10 per cent, to Rs. 11 lakh crore from Rs. 10 lakh crore.
The government is expected to allocate about Rs. 1.8 lakh crore for food subsidies in 2019-20.
Other than the farming sector, any announcement by the finance minister about the struggling banking sector will be watched closely. The government expects commercial banks to recover Rs. 70,000 crore in bad loans by the end of March.
Notable announcements can be expected on availability of credit to the MSME (micro, small and medium enterprises) sector.
State-run banks - struggling with stressed assets worth Rs. 11 lakh crore - have agreed to step up their efforts to finance the Pradhan Mantri Awas Yojana, aimed at securing housing for all by 2022.
A capital infusion worth Rs. 4,000 crore is expected for public sector general insurers, according to Reuters.