The much awaited union budget is finally presented. Does it hold great promise for the nation or is it just another ritual? I am afraid the jury is divided.
It was fascinating to hear familiar lexicon like “Animal Spirit, “Hogwash”, “Retrograde”, “Old wine in New Bottles” &“Lackluster” after the union Budget 2019 was presented by the first woman Finance Minister, Nirmala Sitaraman. Perhaps the doing away with the British times briefcase tradition & replacing that with the traditional, hopefully Eco-friendly bag gifted by her (aunt), the finance minister’s more than two hours of a monologue without a break could have also been the first ever in Budgetary history. The loud thuds by the treasury benches lead by the PM himself occasionally interspersed by innocuous boos by the depleted opposition finally ended with both the commoner & the connoisseur twitching their hands & shaking their heads for the good & bad that they may have individually deciphered from the yearly ritual.
I was actually hoping for a presentation that reflected the massive stamp of authority & trust that the people of this country reposed in Modi & BJP. For a common man, subjects like Fiscal deficit, foreign borrowings, Banks & NBFC’s recapitalization & reduction of tax on corporates clocking below 400cr have little meaning or depth for their life. The middle class continues to suffer the unholy cross having to live with the litany of day to day challenges without any respite.
That a startup can enjoy a tax holiday & benefit from the provision of sunset tax is in bare contrast to a salaried guy who has just been able to land himself/herself in a job at the beginning of his career by sheer dint of talent & toil. It was all fine for the government to bring the guy under the existing tax structure if he / she was at the receiving end of a government sponsoredpublic sector job or largesse. But to tax someone who has none of such entry, privilege or incentive provided by the government while he/she is beginning his/her professional innings, it is highly unfair to burden this segment of people with the same tax slab as any established corporate executive or a millennial. It also goes against the spirit of the poem by celebrated Tamil Poet Pisirandaiyaar, referred to by the Hon’ble Finance minister.
Similarly you have professionals like doctors, architects, sportspersons, Chartered accountants who the world knows earn much higher than asalaried person & yet they end up paying pittance by way of taxes is retrograde. . Regardless of whatever explanation or punditry is offered to justify the same, it not only looks improper & unethical on paper, it looks fraudulent in application too.
To come around & say that one can have the privilege of a rebate up to 3.5 lacs if one were to buy one’s own house the first time is again putting the cart in front of the horse. Take for example a first timer, a multinational executive whose tax liability accrues to 10 lacs approximately. In order to be entitled to such a rebate he first has to buy a house that could cost no less than 55 lacs worth of stamp duty have most of it financed by a bank & then have the installments scattered over 60-120 months in order to save the most of 3.5 lacs of interest payouts.
To tax knowledge is another minus of this budget. Prohibitive taxes means the reader will have to pay more for books and perhaps over time have less access to the variety of books.
By levying a five per cent duty on imported books, the government may have wanted to promote the indigenous publishing business, but how this guarantee does the quality & content of what a discerning reader may wish to read. Taxing knowledge and information is a retrograde step. In the globalized world we live, the government should look at ways to equip Indian industry to compete with the best in the world with training, exposure and access to the best quality. The Indian publishing industry does not need to be protected, it needs to be nurtured.
Notwithstanding the Governments’ make believe claim of a strong push for infrastructure development, borrowings from International markets, I am afraid these can come at a price in later stages of a financial cycle. It may well be argued that with a steady CAD of 3.3% and a healthy foreign exchange reserves, the short to medium term scenario may look attractive, but the same may or may not long with ever so volatile global markets & the raging trade wars between world economies. Ostensibly the idea behind opening up single brand retail & 100 % FDI in health & insurance sectors coincides with the imagination of foreign fund influx into the country. This may push growth, spur economy; rev up infrastructure development by few notches but with an increased exposure come enhanced risks too. The ambitious target of becoming $5 trillion economy by 2024 is perhaps the farthest goal that Government economists have to score.
The leading opposition party Congress has dubbed the budget as “old wine in new bottle”. It has alleged that the government has walked back on all their old promises. Terming the budget lackluster and uninspiring, Congress spokesperson Randeep Surjewala said “An utterly lackluster, nondescript, uninspiring and directionless Budget 2019. Zero on economic revival. Zero on rural growth. Zero on job creation. Zero on urban rejuvenation. Can a mundane jugglery of ‘acronyms’ pass off for vision for a ‘New India’?” Surjewala asked.
One would have expected the government to devote few minutes to the Job crisis & unemployment. There seems complete indifference to this critical aspect when most of the 65% of India’s youth is languishing either in paltry paying jobs or without any job at al. The youth who voted en masse for Modi must feel betrayed. On the contrary, all those who make the cut to top educational institutes of eminence like IITs end up coughing up large amounts by way of tuition fees & other ancillaries. This is mostly true of the general category students. Yet at the same time the facilities provided to these gems that represent the future & pride of our nation are dismal.
Unless priority is given to this sector along with reforming the education sector, there could be terrible stress & anxiety among the country’s youth. Similarly how could this government double farmer’ incomes is a question that has been left vague & unexplained? This section of our society continues to be in utter distress & disdain owing to peace meal balm being applied by various governments including the current one. There is no irrevocable promise made to fulfill minimum support price (MSP), no way to fight famine-drought, no steps to strengthen rural economy.
Another depressing announcement is the additional load of Rs 2 on diesel & petrol. While increase in diesel also impacts the farmers, it makes motorist pay more for no justifiable reason. Instaed of rationalizing levy of taxes & bringing oil under GST, the government continues to maintain an ostrich like attitude about these items of daily consumption.
It is all too good to invent new phrases & coin new language, each time you wish to make a rather inconvenient point or an announcement. But the same is no substitute for actual reformative governance or agenda setting that is in sync with the ground pulse. I am afraid there is no FEEL GOOD factor in this year’s budget except that the presentation was made by a Woman Finance minister for the first time ever.