Reflections on the 2020 Union Budget: Disappointing Clauses and Their Impacts

Introduction

While the Union Budget for 2020 was expected to bring about significant economic reforms, many critics have expressed disappointment. This article delves into the specific clauses and policies that failed to impress, particularly focusing on the complexities introduced in the tax system, the distress of farmers, and the lack of meaningful job creation measures. Additionally, it will explore the broader implications of these decisions on individual savings and long-term economic growth.

Complexities in the Tax System

The 2020 Union Budget introduced a significant overhaul of the tax system, resulting in a doubling of tax slabs with quadrupled complexity. According to the official statement, the number of tax slabs was increased from four to eight, each bringing with it a higher level of intricacy. For example, the zero tax slab, traditionally set at a low level, was hiked to Rs. 5 lakh (approximately $6,500 USD), effectively discouraging savings among individuals and families.

Discouragement of Savings

One of the most significant criticisms surrounding the Union Budget has been the strategy to hike the slab level of zero tax to Rs. 5 lakh. This change was seen as a discouragement to savings, as it means that a larger segment of the population is now subjected to taxation. Furthermore, the traditional strength of the Indian economy, which has relied heavily on individual and household savings, may be eroded due to the limited disposable income of young individuals who find it increasingly difficult to manage their finances even with rising salaries.

The rationale behind this decision was to generate more revenue for the government. However, for many young and middle-class families, this has merely highlighted the difficulty in saving enough for future needs. With the introduction of high credit card usage and other spending habits, even higher salaries are insufficient for those who are not careful with their financial management.

Impact on Farmers

Another area of significant disappointment is the apparent lack of concrete measures supporting farmers. The policy speech highlighted various distress signals among the farming community, emphasizing the severe challenges they face. The decision to abruptly cut subsidies and support schemes has left many farmers feeling abandoned. The MG-NREGA (Mahatma Gandhi National Rural Employment Guarantee Act) has been a lifeline for many rural communities, providing employment opportunities during lean periods. Its discontinuation without adequate alternatives has raised concerns about the well-being and livelihood security of millions of farmers.

Job Creation Measures

Job creation has long been a priority for the government, with the aim of reducing unemployment rates and promoting economic growth. However, the 2020 Union Budget failed to deliver on this front. The focus on various industrial incentives and schemes aimed at large corporations rather than small and medium enterprises (SMEs) has been criticized as insufficient. The lack of robust job creation measures has contributed to a stagnant job market and a slow net growth rate. Instead of focusing on creating substantial and meaningful employment opportunities, the budget has largely ignored the needs of the smaller segments of the economy that are responsible for a significant portion of job creation.

Educational and Scientific Budgets

The educational and scientific budgets also received significant scrutiny. Despite recognizing the importance of education and scientific research for long-term economic growth, the Union Budget did not allocate the necessary funds to address these critical areas. Educational institutions are facing budget cuts, which could have lasting implications for the quality of education and the future innovation capabilities of the country. Similarly, the allocation for science and research appears insufficient, jeopardizing India’s position in the global race for technological advancement.

Conclusion

In conclusion, the 2020 Union Budget has spawned a series of disappointments across various sectors. The increased complexity in tax slabs, the distress among farmers, and the lack of meaningful job creation measures have taken a toll on individual savings and long-term economic growth. It is crucial for future budgets to address these shortcomings and provide the necessary support and measures to foster a robust and resilient economy.