Howsoever prudent the budget, the fact remains that it encourages the status quo. Probably, Prime Minister Narender Modi’s government had UP elections in view. There is no new text proposal, nor is there any long term plan of how to collect revenue. The dependence is on the indirect taxation and the curtailment of subsidies. There is nothing wrong in resorting to such method. But the adverse effect is obvious.
Today’s India is crying for jobs. Thousands and thousands of graduates have no employment. The private sector has not expanded enough to absorb them. Agriculture is going up, as much as 4.1 per cent. But the graduates want a white collar job, even though the salary is low. Finance Minister Arun Jaitley admits that the budget has not created job. But his defence is that if and when the economy picks up, the job will come.
It is no consolation to the college quitting students that the jobs would come sooner or later. Some relief has been given to the small scale industry. But this is not adequate for giving fillip to the sector. The public enterprises, which was supposed to touch the commanding heights, has failed to do so because it is starved of funds.
The biggest drawback is that there is no planning. When the Prime Minister Narender Modi assumed the reins of government he wound up the Udhyog Bhawan. He did not believe in planning and thought it fit to spend as much money as required. There is nothing in such thinking except that there is no rhythm in expenditure. The government has felt the need but has left to the ministry concerned to plan its own expenditure.
There is still an obsession with us that deficit financing should be curtailed. When the inflation hovers around 3.5 per cent, there is no harm in spending more. The system can take it. Only by spending more, the country can have new enterprises, private and public.
What has weighed with the finance minister is fiscal management, not political maneuvering. That is the reason why the Rashtriya Syamsewak Sangh (RSS) has criticized the budget, arguing that expectations have not been met. Arun Jaitley was thinking of country’s fiscal health, even at the risk of annoying those who control the Bhartiya Janata Party (BJP).
By bringing down the contributions to the political parties, from rupees twenty thousands to two thousands, he has risked the annoyance of all political parties, including the Leftists. But he had his eyes fixed on presenting a balanced picture before the country. Therefore, touching the contribution to the political parties was essential.
Markets have heaved a sigh of relief with Sensex zooming by 486 points when the budget was announced. There is, however, no any long-term capital gain tax on shares trading as many feared. Still the government should have in its mind some upper limit. It cannot be free for all. True, there is no planning commission, nor a socialistic pattern of society, as India’s first Prime Minister Jawaharlal Nehru had envisaged. But to have some contours for the economy are necessary.
To the common relief of the middle class, the government has proposed to halve the income tax to 5 per cent for those earning between rupees 2,50,000 and rupees 5,00,000 per annum. This will increase the number of tax payers because to hide money is also a great hazard. Many experienced it when they were exchanging the currency notes of rupees 500 and 1000. In the black market, they were sold at half the price. The Medicare scheme is noteworthy.
The government’s decision to have the joint budget, the general and the railways, is a departure from the practice of many-many years. If I am not mistaken, this is the first time that joint budget has been presented before parliament since independence. If nothing else, it will keep railways out of politics.
Reducing corporate taxes for companies with an annual turnover up to Rs. 50 crore will benefit 96 per cent of companies. The idea of introducing electoral bonds is a novel one and possibly the first of its kind in the world. This will streamline and cleanse electoral funding. Banning cash transactions over rupees 3 lakhs will allow the banks to focus on value based banking rather than purely transaction banking.
Abolition of Foreign Investment Promotion Board (FIPB) may streamline funds coming from abroad. Providing infrastructure status to affordable tenements and ratinalization of area will make the housing sector more competitive. It is good that the builders who do not deliver the houses on time are punished through the obligation to give back part of money to the people who have given the advance.
Modi’s government is half way from the general election. It has probably some prospective in view. But it is not visible and that is going to affect adversely the outcome of next general election. No doubt, he would like to have another term. His task has been made easy because Congress Vice-President Rahul Gandhi is not a formidable opponent.
The tragedy of reelecting Modi is strengthening the Hindutva. Those who take order from Nagpur, the headquarter of RSS cannot serve the country which has secularism as its ethos. The constitution which rules the country gives equal right to Hindus, Muslims, Sikhs and Christians. The BJP cannot challenge the letter of the constitution because of the Supreme Court which recently held that religion or caste cannot be used for propaganda purpose during the elections. It is not the letter but the spirit which counts. The economy will have to change accordingly.