Introduction: Modi Sarkar’s First Budget and Its Economic Impact
The Modi Sarkar’s first budget introduced a series of economic measures aimed at reducing inflation, increasing disposable income, and boosting the overall economic growth. This budget marked a significant shift in the Indian economic policy, especially for the middle class.
Focus on the Vehicles Manufacturing Sector
The budget allocated considerable attention to the vehicles manufacturing sector. Unfortunately, despite the reduction in repo rates by the Reserve Bank of India (RBI), the sale of vehicles, particularly cars, has decreased by almost 40%. This decrease poses a significant threat to the economy and has led to higher unemployment rates. The desire to implement fewer restrictions, such as taxes and insurance standards, could help reignite the sector.
Understanding the Impact of Budget Initiatives on Middle Class
The various budget initiatives aimed at making life easier for the middle class came after extensive modifications made in the past five years. The budget stands as a testament to the government's commitment to reducing inequality and promoting economic growth.
Addressing Inflation: A Crucial Milestone
Inflation has been a significant concern in the Indian economy. The inflation rate had risen to 101 in 2013-14 but dropped significantly to 22 by 2018. If the inflation rate had continued to rise annually at the rate of 101, a 1 kg rice that cost 50 rupees in 2014 would have cost 80 rupees by 2024. However, due to the average price hike of 45%, the cost of 1 kg rice in 2018 was only 62.5 rupees.
This reduction in inflation has led to an increase in the middle class’s purchasing power by 28%. This means that the same amount of money now buys more goods and services. Additionally, reducing the impact of inflation on households has allowed them to save more. If inflation had remained at 101 annually, the same hard-earned money in 2014 would have resulted in a 25% reduction in purchasing power. The relief in price hikes can be attributed to grassroots policy changes and improvements in the c discussed:
-Lesser restrictions on the vehicles manufacturing sector like taxes and insurance standards.
-Reducing class purchasing power and middle-class life.
-Initiatives to reduce inflation and improve the overall economic situation.
Introducing GST and its Impact
The implementation of the Goods and Services Tax (GST) has been instrumental in reducing the tax burden on consumers and facilitating easier transactions. A household spending 8400 rupees monthly can now save 320 rupees in taxes. This is because double tax exemptions have been eliminated under the GST system, and tax is only applicable on the value addition.
Not only has this reduced the tax burden, but it has also made it easier for the middle class to file their tax returns and get refunds. Furthermore, the government aims to expedite the tax return processing to within 24 hours, which is a significant step towards efficient and transparent tax administration.
Structural Changes and Their Benefits
Despite the challenges, the budget highlights the importance of the structural changes made over the past five years. The reduction in inflation levels has not only improved the purchasing power of the middle class but has also decreased loan burdens. Lower loan burdens encourage more investments in the economy, which is crucial for sustained growth.
Conclusion
In conclusion, the Modi Sarkar’s first budget focuses on addressing the challenges of inflation and improving the economic situation of the middle class. The reduction in taxes, the introduction of GST, and the focus on the vehicles manufacturing sector represent a significant step in achieving these goals. The government’s ongoing efforts towards reducing restrictions, increasing savings, and improving overall economic conditions are commendable and necessary for the long-term growth and development of the country.