No strategy can be the best; while for some high corporate taxation was a worry, for the others increase in tax slabs for individuals was a need. Not everyone can be made happy while planning, but plans that can promise profitability and inclusive growth, along with sustainability, must be cheered, which is why I will call the Modi-led government’s first full-fledged budget as a win for all the stakeholders, corporates or individuals, affluent or poor. I can’t wait to mention the social stress of the Finance Minister where he declared the launch of universal social security and pension schemes including the Pradhan MantriSuraksha Bima Yojana that would cover accidental death risk of INR 2 lakh at a premium of just INR 12 per year, something that underprivileged households can feel contended about. Then is the accidental and natural death cover of INR 2 lakh for a premium of INR 330 per year for the age group 18-50 under thePradhan Mantri Jeevan Jyoti Yojana. Unclaimed deposits of as high as INR 9,000 crore lying in PPF/ EPF schemes would be used to set up a senior citizen welfare fund, minority youth would benefit from the new education welfare scheme ‘NayiManzil’, and with priority for SC/ ST talent comes the Mudra Bank with a corpus of INR 20,000 crore, isn’t it time to make true the dreams, even when resources are lacking with this cluster? I have mentioned these highlights in the very beginning since these members of the society are the ones who look forward to budget every year with a hope to betterment of their lives; the Finance Minister has delivered much.
Though the past Prime Minister, Dr. Manmohan Singh has said that the budget of Arun Jaitley lacks adequate roadmap, I am sure that the very first economic strategy of the Modi government, which inherited multiple setbacks from the UPA, is pro-development and looks at correcting the fundamentals, rather than unjustly satisfying tax-payers by revising income tax slabs, which is why I have called Jaitley’s budget as socialist and not populist. Rather, the present FM enhanced the deduction limit of health insurance premium from INR 15,000 to INR 25,000, while for senior citizens the same is now INR 30,000. This is in view of promoting health insurance among Indians and I am sure that preventive healthcare in individuals would see a boost after this. The budget also has something for people aged above 80 years who have been allowed a deduction of INR 30,000 incurred on medical treatment. Differently-abled persons too have a take away with an additional deduction of INR 25,000, thus the limit becomes INR 75,000 now. Adding to future earning security of Indians is the Atal Pension Yojana that would provide a defined pension to the contributor depending on contribution (here the government will contribute 50 per cent of the beneficiaries’ premium for initial five years) and its period. Though the tax slabs have remained unchanged, moves of the FM with regards to social security and definite lifelong earnings are appreciable.
I am very sure that the corporates have a lot to cheer about since corporation tax rate is to be reduced from massively high 30 per cent to 25 per cent in a phased manner, which will allow businesses to run sustainable operations, and will discourage tax evasions and avoidances. There may be some strings attached as the FM has talked about rationalization and withdrawal of some tax exemptions to businesses, the roll out of which is yet to be seen; the sector expects co-operative measures. Next was the target for the government to curb any future generation of black money, and multiple mention of the same in the budget speech of the FM, along with a stricter and comprehensive law on black money has assured that Modi’s stance on this issue remains focused. I was, however, hoping for voluntary disclosure scheme on this matter that could boost flow of taxes to the exchequer without litigations. Infrastructure was the most talked-about subject in the recent past and it has been addressed well by the proposal for tax-free infra bonds and increase in the budgetary allocation for roads and railways; as compared to previous FY, the increase is by INR 70,000 crore. PPP model in infrastructure development will be revisited, which was much-needed looking at the projects that failed to take-off. Augmenting the renewable energy sector is considered in this budget. New IITs, AIIMS and IIMs would for sure add to the process of skill development of the future line of doctors, engineers and entrepreneurs; though in the coming days I would hope that the government could also extend venues of skill development to those who lack school education. Atal Innovation Mission with a sum of INR 150 crore will be a platform for academics, entrepreneurs and researchers.
Avoiding resort to retrospective tax provisions, INR 25,000 crore to the corpus of RIDF set up in NABARD, fiscal consolidation over the next three years, JAM mechanism to cut any leakages and inefficiency in the subsidy flow to the poor, soil and water improvement for better agriculture and unified national agriculture market for farmers to sell their produce, new bankruptcy code (an answer to current disgusting procedures to get rid of an unprofitable business), seed capital for start-ups, appointment of an Expert Committee to replace the lengthy multiple permission and clearances regime, and Gold Monetization Scheme as a measure to provide benefits of earning interest by individuals on their metal accounts are other key highlights. My concern in the gold scheme, however, remains that most of the gold with Indians is undeclared; hence to bring this in public domain a gold voluntary disclosure scheme, with benefits like taxing declared gold at fixed rate would have solved multiple concerns simultaneously, for say CAD would reduce due to lesser imports, exchequer would profit from taxes and money to declarers would come in circulation benefitting the overall economy. I was also worried about the introduction of GST to replace the cumbersomeindirect taxation system, and it is assuring to hear that the samewould be brought in next financial year. Having said all this, it is also necessary to state that challenges are not met by introducing policies and making announcements, much is dependent on implementation and then analyzing any failures in the process of policy making.
Government has reinforced its commitment for re-starting stalled infra projects and reducing stress on the banking sector by allocating Rs. 20,000 crore for creation of National Investment & Infrastructure Fund. This may be supplemented by Government companies and banks, which would attract a huge pool of both, equity and debt capital for Indian infra and manufacturing thereby creating jobs.Farmers will see a large increase in their incomes through increased agricultural productivity due to PM Sinchayee Yojana, higher agricultural credit and soil health cards. Rapid progress is expected towards achieving Government’s vision of 24X7 power with 5 UMPPs with a cumulative capacity of 20,000 MW under a plug and play model, with an investment of Rs. 1 lac Cr. In terms of fiscal consolidation, Jaitley has stuck to the medium-term goal of a fiscal deficit of three per cent of GDP – but in three years, rather than two. This will give him breathing space and allow him to spend that much more to boost public investment and domestic demand. Jaitley is a cautious, careful man, a person who often emphasises predictability and the absence of abrupt and unpleasant surprises in tax structures and fiscal policies. In this Budget, he has set benchmarks for the rest of his term. For housing, school and medical facilities, he has set targets right up to 2022, the 75th year of India’s independence. In that sense, the direction of his government is clear very early in the day. Narendra Modi takes election manifestoes seriously. This genuineness in intent and purpose has defined the 2015 Budget as well. With Jaitley, you don’t get impressive statements. He is not P Chidambaram or Montek Singh Ahluwalia, who spent 10 years promising the moon. In the economic regime of Jaitley and Modi what you see is what you get. India will be happy with this.
However, fund for start-ups was announced in the last year budget as well, and also were some schemes for the common man that still await execution and disbursement of funds to the intended beneficiaries. Let us hope that this year’s budget proposals are executed in a time-bound and well-organized manner, and India attains the echelons the present government wants it to. As a participant, we all need to pay heed to a basic fact that the revenues column of this revenue and expenditure statement of the government comes from our sincere and timely payment of taxes, be it by individuals or corporates; hence honest declaration of income in IT returns is expected to help our chosen rulers attain the target of inclusive growth. Needless to mention, this socialist budget with focus on growth is the beginning of a new era, an era where both expectations and delivery will be high.
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