Budget 2018: Why the health insurance scheme is no way less grand in design than the Jan Dhan Yojana

Budget 2018: Every single commentator at the pre-Budget meets had declared it would be a rural-focused Budget by the government. The government didn’t disappoint, though the pleasant surprise was its focus on health. The health insurance programme that has been launched is in no way less grand in design than the PM Jan-Dhan Yojana that promised one bank account to each family. But it is definitely going to be more challenging to deliver. However, this, indeed, opens up huge opportunities for both the insurance and healthcare sectors. How these opportunities will be utilised is, of course, to be observed. Various pressing areas in respect of the rural and agricultural sector appear to have been addressed. These include ensuring realisation of at least 150% of the cost of inputs for all crops, investments in rural market infrastructure, food processing, et al.

Rural roads, organic farming, other allied activities, such as poultry, dairy and fisheries have also been addressed. However, the outlay for core projects such as the MGNREG Act has not increased, though hopefully, efficient implementation will enable the allocated amount to achieve more.  The NITI Aayog has been charged with finding a way for registering tenant farmers to enable them to access the formal banking system. This is a crying need and has been one of the areas that have defied a solution in the face of land owners’ fears of dilution of their ownership rights. The projection of the fiscal deficit at 3.5%, though anticipated, has caused a further hardening of yields by about 20 basis points. This is on top of the nearly 130 bps increase in the last seven months on the back of increase in oil prices, concerns about rate hikes by the US Federal Reserve, exacerbated by the RBI’s Rs 90,000-crore open market operations to suck out liquidity created by its foreign exchange operations, that has pushed the banking system into a liquidity-deficit mode.

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The worry remains that with credit demand going up, deposit accretion slowing, banks will have even less appetite for the government paper. In these circumstances, raising the TDS limit to Rs 50,000 is a step in the right direction, as along with the long-term capital gains on equity investments, it creates a more level playing field for bank deposits.  It is to be appreciated that this year’s Budget has not increased subsidies under most heads. The implementation challenges will, however, be substantial. Whether it be in the area of implementing the creation of 10 iconic tourism sites, the smart cities, or the various infrastructure projects involving the railways, roads, and airports. Job creation, which all agree is this government’s biggest challenge, will depend on swift and efficient implementation.


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The one observation of FM about the average taxes paid by salary earners as compared to that paid by business people and individuals gives pause for thought, especially as the latter class is considered to be better off. It is time to level this playing field as well, if India is to grow equitably.