February 28, 2025 – The Union Budget 2018-19, presented on February 1, 2018, by the then Finance Minister, remains a significant milestone in India’s economic journey. It was a budget that skillfully walked the tightrope between populist measures aimed at garnering public support and pragmatic economic reforms to ensure long-term growth. As the last full budget before the 2019 general elections, it reflected the government’s intent to address the needs of diverse sections of society while keeping fiscal discipline in check.
One of the standout features of the 2018-19 budget was its focus on rural and agricultural development, a move widely seen as an attempt to appease the farming community, which had been vocal about its struggles. A substantial allocation of ₹14.34 lakh crore was announced for rural infrastructure, including irrigation, roads, and housing. The introduction of the “Operation Green” initiative, with an outlay of ₹500 crore, aimed to stabilize the prices of perishable commodities like tomatoes, onions, and potatoes, often referred to as TOP crops. This was paired with a promise to ensure farmers received 1.5 times the cost of production as the minimum support price (MSP), a populist measure designed to win over the agrarian vote bank.
Healthcare also took center stage with the unveiling of the ambitious National Health Protection Scheme, dubbed “Modicare.” This scheme promised to provide up to ₹5 lakh per family annually for secondary and tertiary healthcare to over 100 million vulnerable families, covering nearly 500 million people. While this was hailed as a game-changer for India’s underfunded public health system, critics pointed out the lack of clarity on funding and implementation, raising questions about whether it was more of an election-year sop than a sustainable policy.
On the economic front, the budget maintained a delicate balance. The fiscal deficit target was set at 3.3% of GDP, a slight relaxation from the earlier goal of 3%, signaling a pragmatic approach to stimulate growth amid global uncertainties. Customs duties were raised on several imported goods like mobile phones and televisions to boost domestic manufacturing under the “Make in India” banner. This protectionist stance aimed to create jobs and reduce import dependency, though it risked increasing costs for consumers.
Taxation policies reflected a mix of relief and revenue generation. The reintroduction of the standard deduction of ₹40,000 for salaried employees was a welcome move, providing tax relief of about ₹10,000 crore to the middle class. However, the imposition of a 10% long-term capital gains (LTCG) tax on equity investments exceeding ₹1 lakh disappointed investors, as it ended a long-standing exemption. This move was justified as a step toward equitable taxation, but it sparked debates about its impact on stock market sentiment.
Infrastructure development, a key driver of economic growth, received a boost with ₹5.97 lakh crore allocated for projects like highways, railways, and airports. The budget also emphasized the digital economy, with plans to expand optical fiber networks and promote digital transactions in rural areas. These measures aligned with the vision of a modern, technology-driven India, though some analysts argued that the execution of such ambitious plans remained a challenge.
For small and medium enterprises (SMEs), the reduction of the corporate tax rate to 25% for companies with a turnover of up to ₹250 crore was a significant relief. This move, benefiting nearly 99% of registered companies, aimed to spur job creation and economic activity. However, the absence of bold reforms in areas like labor laws or land acquisition suggested a cautious approach, prioritizing stability over disruption.
The Union Budget 2018-19 was not without its critics. Opposition parties labeled it as an “election budget,” arguing that schemes like Modicare and rural spending were more about optics than substance. Economists, meanwhile, expressed concerns over the lack of measures to address rising fuel prices and the growing non-performing assets (NPAs) in the banking sector. Yet, supporters hailed it as a balanced effort that catered to the poor, the middle class, and industry alike.
In hindsight, the 2018-19 budget encapsulated the complexities of governing a diverse nation like India. It blended populist promises with economic prudence, aiming to lay the groundwork for inclusive growth while keeping an eye on electoral prospects. Whether it succeeded in striking the perfect balance remains a matter of perspective, but it undeniably set the tone for debates on how India navigates its economic future.
