Home to over 13 million people, Mumbai has its eye on the Union Budget that will be presented by Finance Minister Pranab Mukherjee on Friday. The Budget will profoundly affect Mumbaiites, not only in terms of how much tax they’ll pay, but also in terms of housing, infrastructure and jobs.
The Budget will also affect food prices — a major concern over the past year — which tend to be even higher in large cities. What the Budget does to rein in prices will be critical as it will directly affect your lifestyle and savings capacity.
There is talk of a rise in the tax exemption limit for a working male by up to Rs 20,000, ie, from the current Rs 1.6 lakh to Rs 1.8 lakh. That means an extra Rs 2,060 in your pocket.
With a large working class, any such exemption would make a huge difference to Mumbai. More money left in your pocket means greater purchasing power.
The ambitious Jawaharlal Nehru National Urban Renewal Mission (JNNURM), formed to boost infrastructure in 65 cities, has a strong focus on Mumbai. Till March 2009, it had received project approvals of over Rs 4,500 crore. This money is being spent on building basic infrastructure like flyovers, water supply, drains, etc.
Budget 2009-10 allocated Rs 4,400 crore for urban infrastructure, Rs 2,044 crore for basic services to the urban poor and Rs 1,099 crore for integrated housing and slum development through the 65 cities JNNURM focuses on.
Budget 2010-11 is expected to further increase JNNURM allocations, benefiting Mumbai.
“The metros will remain JNNURM's focus,” said DK Joshi, principal economist at ratings agency Crisil.
Another focus area is affordable housing, a provision for which has been made in JNNURM. Other than generating employment for the urban poor, JNNURM will look to ensure enough supply of land, shelter and services at affordable prices to all sections of society. This, in turn, will prevent the growth of slums.
Over the past year, there’s a renewed focus on affordable housing. Given that most houses in Mumbai are out of reach for the common man, what the Budget does to boost affordable housing will be eagerly watched.
“Affordable housing is the need of the hour. Since land is the major cost, the government can look to allot land at a subsidised rate and builders can build low-cost flats on them. That could help solve the housing problem,” said R.R. Nair, CEO, LIC Housing Finance.
Finally, Mumbai will also look for a boost for industry. Maharashtra and Mumbai being highly industrialised will benefit from any incentives by way of more jobs and growth. “While the Budget is expected to focus on rural India and inclusive growth, any policy that looks to promote industries will benefit Maharashtra,” said Joshi.
Mukherjee has his task cut out. Keeping growth high while simultaneously keeping inflation in check isn't easy.