India government wants ‘more money and more discipline’

Narendra Modi’s first decisions in government may not have helped the Indian wallet a lot in the short term, but they are much-needed for the longer-term good of the country, analysts say.

“It’s pretty tough, like the railway budget, but people are welcoming, saying, ‘that’s what the country needs and we’ll live with that’,” said Gaurav Mashruwala, a financial planner based in Mumbai. “The government is asking for more money and for discipline.”

In the union budget last month, the government increased the annual tax exemption limit for individuals to 250,000 rupees (Dh15,200) from 200,000 rupees. But many had hoped that the exemption limit would have been increased more. The tax exemption limit for savings was increased to 150,000 rupees from 100,000 rupees, which is expected to boost household savings. This was a welcome move amid stubbornly high inflation.

“There will be more money in the wallet because they have increased the income tax exemption limit. The [savings tax band] has been raised, which means more saving revenue and more money in the pocket,” says Mr Mashruwala. “But then there are other things such as railway fares that have gone up drastically. Basically, it’s like ‘we’re giving you more money and at the same time we’re going to ask for money and if you want services you have to pay’.”

He added that Indians would expect services to improve if they were paying more.

But Indians on lower incomes were disappointed.

“I’m not happy,” said Vilas Katte, 24, a restaurant worker in Mumbai who earns 10,000 rupees a month. He explained that he has not seen any benefits from the budget or the new government so far and found the rising cost of living increasingly challenging. “It’s not good for the poor person who is below the poverty line. Everything is shooting up high. Let’s see how it goes.”

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