Union Budget 2019: How you fared during five years of Modi government

NEW DELHI: In the last five years, Modi government kept inflation low and bought down the cost of borrowing, raised taxes on income and investment, but cut them on most goods you consume. It also accelerated access to amenities--power, toilets, roads, bank accounts and education but for middle class asset creation in equity and real estate.

Here's a performance review of the Modi government to assess its impact on you. Did you gain or do you lose in the past five years?

1) Your income

Change in income tax at different income levels.
Low-income taxpayers benefited the most with lowest rate of tax cut to 5% from 10%...

...but tax on the super rich went up by around 3%. Those in 60 lakh income slab hit hardest, with nearly 9% higher tax.
*Assuming all tax saving investments were done.

How much tax you would have paid in other countries

* State income tax in US was not considered.
Data source: Deloitte.

2) Your spending
GST lowered taxes by an average of 4% on most products of mass consumption—on some by up to 15%. It raised taxes on a few products too (eg watches). A better GST would have lowered the tax further by getting more people into the tax net.

• 0%: Milk, fresh and frozen vegetables, fruits, bread, Basmati rice, atta, pulses.
• -3.8%: Packaged chicken and paneer, masalas, mithai, bhujia.
• -6.1%: Biscuits, ice cream.
• -11.6%: Televisions, fridges, washing machines, storage water heaters, irons, shavers, vacuum cleaners, digital cameras and video camera recorders.
• -13.8%: Chewing gum, chocolate.
• -15.3%: Soap, hair oil, toothpaste, shampoo.
• Calculations based on monthly consumption basket of an average middle-income family in Mumbai.

Data source: Deloitte.

3) Your investment
Change in tax provisions: With long-term capital gains tax on stocks & equity funds making a comeback in 2018, one more avenue of middle-class wealth creation became less attractive.

The good
Saving schemes

• Deduction for investment in PPF, NSC, insurance etc, raised from Rs 1 lakh to Rs 1.5 lakh
• Rs 50,000 additional benefit for investment in National Pension Scheme, tax benefits at the time of partial withdrawal added

Property
Holding period for immovable property to qualify for LTCG treatment reduced from 36 months to 24 months
Additional deduction of Rs 50,000 for first-time home buyers for interest paid on home loans (up to Rs 35 lakh)

Insurance
Health insurance premium deduction limit hiked

The bad
Stocks & Funds

• LTCG tax imposed on sale of listed shares and equity MFs of over Rs 1 lakh — applicable on increase in the value of your investments after Jan 31, 2018.
• LTCG tax on non-equity funds doubled to 20%; debt-oriented funds and unlisted shares qualify as long-term capital assets only after being held for 36 months as against 12 months earlier.

4) Your Wealth

from Stock Market...
Annual returns from BSE 500 stocks

Inflation-adjusted returns.

...And

• SIPs made millions of Indians shareholders, many of whom were first-time investors
• Gold prices grew only by 4.6% a year since June 2014
• Growth in RBI’s all-India House Price Index slowed to 5% in Q1 of 2018-19, lowest growth since 2011, except for a temporary dip below 4% in the quarter after demonetisation.

5) Falling inflation

% change in retail, food, wholesale prices

Low inflation (mostly below 5%) was perhaps the single biggest economic achievement of the Modi govt —and the biggest failure of UPA-II. Low price rise, partially helped by low crude oil prices, helped bring down interest rates on everything from home loans to government bonds. The latter helped tame government deficit— completing a virtuous macro-economic cycle.

6) A connected life

Streaming a movie or a match got as cheap as drinking a cup of chai. And connectivity went beyond the mobile, with more sadaks, bijli and airports.

On mobile...
Driven by market forces — such as the era of ‘free’ voice calls ushered in by Jio — mobile ownership topped 90% in 2018. In rural India, 40% people still didn’t own a mobile, but since urban tele-density is 166% (one person owns 1.6 connections), the country average crossed 91%.

Phone subscriptions per 100 people
2009: 39.9
2013: 73.5
2018*: 91.2
Source: TRAI

...on internet...
Dirt-cheap data access led to nearly doubling of internet subscribers from 252 million in March 2014 to 460 million in July 2018. More spectacular was the rise in data usage — from 147 MB per subscriber per month in 2014 to 2,437 MB (2.4 GB) in 2018.

Internet subscribers (in million-wired & wireless)
2014: 252
2016: 343
July 2018: 460

...through roads...
Modi government aimed at building 11,000 km of highways in 2018, up from 9,828 km in 2017-18. That is 30 km a day —more than twice the rate at which UPA-II built.

Highway construction in kilometres
2009-10: 5,146
2018-19 (est): 11,000
Source: Morth

...through planes
Annual air traffic is expected to cross 35 crore passengers in 2018-19. That will be more than three times the number of air passengers ten years ago. Relatively stable air fares and massive expansion of operational airports (now 100) have got nearly a million Indians taking to the skies every day.

Passengers handled (in ’000)
2004-05: 59,283
2017-18: 3,08,753

...and through power
An average Indian now consumes 1,200 units (kilowatt per hour) of electricity in a year — only 30% higher than a decade ago, one-third of global average (3,200 kWh) and less than 10% of what an average US citizen consumes (13,000 kWh). With govt claiming 100% household access to power, expect consumption to spike in the coming years.

India's annual per capita consumption of electricity (kWh)
2004-05: 631.4
2010-11: 818.8
2017-18: 1,149

7) Healthier and more literate

Infant mortality rates have halved while secondary school enrolment has doubled since 2000, with both govts doing well. Where Modi govt will leave a distinct mark is on access to toilets — up from 38% in 2014 to nearly 100%. But ensuring regular use, especially in rural areas, is another challenge.