Budget buzz on the street

With a spate of Union Budget, Budget proposals are read by the Hon’ble Finance Minister in the Central Hall of the August House, the buzz has suddenly erupted in the social media.
Budget buzz on the street

Kamal Baruah

(The writer can be reached at kamalbaruah@yahoo.com)

With a spate of Union Budget, Budget proposals are read by the Hon'ble Finance Minister in the Central Hall of the August House, the buzz has suddenly erupted in the social media. The statistical data are highlighted/praised by the ruling party while addressing media at post-budget, however, it is slammed by oppositions as being pro-corporate at various talk shows, but the feelings of commoners pondered "what gets cheaper and what's costlier". The much-fabled creation of RK Laxman–the common man represents the hopes, aspirations, troubles and perhaps even foibles of the average Indian and for them, a budget is always an opportunity to expect tax concessions.

While following it closely, they felt awestruck by a lot of big numbers on ministry-wise allocation and major schemes for health, water, education and roads that bring them so little idea, yet budget throws up hopes and aspirations of the common man. If you've been foxed by the differences between the financial terms, you're not alone, even a good number of people don't follow it downright. Budget can be tough to digest for every newbie and terminologies like receipts/expenditure of Revenue/Capital are atypical to a logical conclusion.

Most of the nations in the world follow Calendar Year from January to December as Financial Year (FY) but India follows from the colonial era of April to March as FY to align with the British. Our national accounts are confused with international practice. India's rain-dependent economy for sowing and cultivation occurs during the South-West (Kharif crops) and North-East (Rabi crops) Monsoons. The budget may be finalized in October after the South-West Monsoon. This would enable the presentation of the Budget in November, which would lead to the start of the FY in January.

The leather portfolio over the years has been shed by Made-in-India iPad this year. It's a historic moment to hear the voice from the Joint Parliament "Hon'ble Speaker, I present the Budget for the year…India's economy is recovering after a prolonged lockdown during the COVID wave. The slices of statistical graphics are illustrated. The major share of the rupee comes from borrowing and other liabilities (35%). Rising inflation at 5.59% in terms of the Consumer Price Index is especially worrisome. A more daunting task is how to minimize subsidies (8%), pensions (4%) and other expenditure (9%) that carries one-fifth of the numerical proportion of a pie for expenditure.

The tagline for India's economic growth with Aatmanirbhar Bharat is estimated to be 9.2%, the highest among all large economies. While the government's focus has been on the empowerment of citizens, especially the poor and the marginalized by providing housing, electricity, cooking gas and access to water, commoners find nothing special and salaried persons have seen another disappointment as there is no change in Direct Tax.

It provides strong incentives for taxpayers to choose the corporate form of doing business as the personal income tax rate (30%) exceeds the corporate income tax (as low as 15%) by a significant margin. Isn't it a clear bias for entrepreneurs to escape the highest personal income tax? India's per capita GDP stood at Rs 1.4 lakh, while the taxable income threshold is Rs 2.5 lakh. That is weird by any economic logic for not to pay an income tax by average Indian. A new section 194P provides conditional relief to the senior citizen above the age of 75 years from filing the Income-tax return applicable from 1st April 2021.

However, GST collection remains buoyant at 16% allowing the government to focus on aligning with strategic priorities thereby helping economic recovery back on track without changing any big bang rate change from an indirect tax standpoint. Ironically GST is not applicable on petrol and alcohol as taxes have been a strong inflow of revenue for central/state governments.

There are loss-making PSUs with several thousand crores from BSNL, Air India, MTNL, etc. The government now takes initiative for prioritizing privatization of public sector enterprise and production linked incentives (PLI). But at the same time, there are profit-making PSUs such as IOCL, ONGC, NTPC etc. It must strengthen instead of selling PSEs, else it will be limited to North Block and South Block if privatized everything.

After UPI made digital cash easier, RBI now launched Central Bank Digital Currency (CBDC) to boost the digital economy. This electronic form of currency would replace paper (or polymer) shortly, whereby faster real-time remittance is not too far off the mark. The budget also seeks to link 1.5 lakh post offices with the core banking system. Digital health mission, Digital University under one class one channel, linkage of national generic document registration system with the one-nation one-registration software are other things in the pipeline.

India's large and growing population has its best asset and can quadruple GDP with the world's fastest-growing economies but its labour force is inadequately trained. Will this continuity budget spur growth while India needs to create millions of more jobs? That's the biggest development challenge for India else it will risk a decade of economic stagnation.

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