The Narendra Modi government has recently announced some sops for farmers, small business owners and lower middle class, after suffering a major setback in the recently concluded state elections.
The move is expected to make a dent In the coffers of the government even as the ruling dispensation is trying to stick to a decade-low fiscal deficit target of 3.3 percent of the gross domestic product.
But in order to bolster its chances in the upcoming Lok Sabha elections, the Bharatiya Janata Party (BJP) government has promised even more perks.
“They will be for development, they will be for transformation,” Ravi Shankar Prasad ,minister for law, justice, and information technology, told Parliament this week, referring to inducements for the electorate.
“Who wins or loses, the people will decide. We are confident when elections happen, the country’s public will again give a big majority to the ruling coalition led by Narendra Modi.”
Following are steps the government has taken, in addition to proposals for farm-loan waivers worth billions of dollars after the main opposition Congress defeated the BJP in the agrarian states of Madhya Pradesh, Rajasthan and Chhattisgarh in state assembly elections late last year.
Measure for small businesses
The government on January 10 announced to exceed national sales tax limit for small businesses. Businesses with annual sales of up to 4 million rupees will be exempt from the Goods and Services Tax (GST). Currently, firms with an annual turnover of up to 2 million rupees are exempt. The change will come into effect in April. The move is expected to benefit an additional two million small businesses.
Measure for farmers
Taking note of the farmers' crisis the government is considering three options for a relief package to help farmers suffering because of low crop prices at a cost of as much as 3 trillion rupees ($42.82 billion), according to three government sources. The possibilities are a direct payment to all landowning farmers, compensation for those who sold produce below government prices, and a loan forgiveness programme.
The Parliament on Wednesday passed a landmark bill reserving 10% of government jobs for people outside high-income brackets. Under the amendment to the constitution, floated by the BJP, people with an annual income of less than 800,000 rupees and owning less than five acres of land, would be eligible.
The government said on December 26 it would ban e-commerce companies such as Amazon.com and the Walmart-owned Flipkart Group from selling products from companies in which they have an equity interest.
The rule will be applicable from February 1, and came after complaints from retailers and traders, who say the big companies are using their control over inventory from their affiliates, and through exclusive sales agreements, to create an unfair market that allows them to sell some products at very low prices.
Sales tax cut
On December 22, the government slashed the sales tax rate on more than 20 items — including televisions, batteries and movie tickets - aiming to appeal to traders and the middle class.