UNION BUDGET 2012

The budget announced by Finance Minister Pranab Mukherji elicited very mixed response from the cross section of people, professionals and corporates.

What could have been a daring and creative proposition available in front of the Finance Minister could not get fully used by him on account of the coalition politics. When you have partners in your ministry who behave worse than the opposition parties, what could the FM do? From whatever had happened on the Union rail budget lately, one can surmise that nothing could have been done by the hapless FM to make his budget bold, creative and reform centric.

First of all, this budget pronouncement was full of correcting & strengthening the gaps and loopholes in the existing tax rules of the country and some of the moves to make the rules to be applicable retrospectively from the year 1962 etc are indeed retrograde steps. The pronouncement of Supreme Court in the Vodafone case had been playing around his mind all the while making this budget.

The basic feedback from professionals is that he gave away concessions worth INR 4000crores only to take away INR 40,000 crores thru some other routes (mainly Indirect Taxes). The Shakespearian adage of “I must be cruel to be kind” had been literally adopted by the FM in the budget for the year 2012.From the reform perspective there is nothing in the budget but for some wish lists. Thus this budget has more tokenism than actual acts. In a coalition setup like this, he can now only wish but not act. And even if he has to act, it has to be on the back and not thru legitimate measures like Budget announcements. As we all had seen in the past, come October, all these pronouncements will change course very discreetly thru a bill at Parliament without any noise that the media is making of the budget now.

Happy to see that the subsidies are not increased in this year. Hope it could be a trend setter towards less subsidy regime. Personally I am not against the poor getting benefited from welfare measures such as subsidies but when it is the rich businessmen, middlemen and corrupt politicians who are benefitting out of such acts why increase the welfare measures?

If I had taken the Economic survey released prior to the budget as an indication, I must confess that there is no correlation between the two. I am unhappy that when we had built up strong institutions for specific purposes for guiding the destiny of the nation, but when they have become useless or when they contradict each other, how do you expect the country to progress?

The expectation from the Indirect tax next year is far greater than that of the direct taxes। This is a straight indication that corporates could expect heavy hit this year. It is really not good to see economies where indirect taxation is far exceeding the direct taxes. On Income tax front the FM delivered what is expected. However by increasing the tax avoidance limit, the Government is releasing many individuals from of the tax net. Considering the realistic situation that the black money component is still very high in India, simply removing individuals from the tax net will give very limited captive payers for direct taxes. When we take a look at the actual number of IT payers out of the population of 110 crores of Indians, we would realise the anomaly very clearly. Some innovative (but not perverted) methods need to be adopted for bringing more individuals into tax net.

Poor tax collections and indifference of PSUs to disinvest had resulted in the Fiscal deficit shooting skywards to 5.9 % whereas the estimate last year was some 4.6%. The FM now is anticipating it to come down to 5.1%. There is a great deal of fudging the fiscal deficict number here. Neither the Centre nor the State, noone is serious about fiscal discipline. Lack a discipline is a serious challenge that we Indians face in every aspect of living.

I am not sure whether we are watching our country’s defence expenditure. If ever someone criticise it, he would be considered as a traitor so, everyone keeps his mouth shut about the defence budget. With no CAG audit taking place and with the perceived ‘defence discipline’ working well, we feel that every penny put in is well spent on safeguarding the Indians. Nothing is far from the truth. There is severe corruption within the armed forces. Close to two per cent of the budget expenditure is earmarked for defence. By itself, it is the largest of expenditure. Additionally many amounts meant for defence expenditure is adjusted somewhere else like Atomic Commission, Space Commission, Border Roads etc. I understand that even salary/pension amounts of defence personnel are accommodated in the civilian budgets. With all these going, there is no surprise that India had become the biggest defence product/equipment buyer of the world. In a country where poverty continues to be the major worry, where children die in thousands every day due to malnourishing, when so many people are homeless; it is a moot question why there is so much earmarked for defence expenditure? Hearing the contradictions from within the armed forces, the bureaucrats and others, one still feels that all these are really not going to protect an average Indian. Drumming up on threats from Pakistan, China and host of terrorist outfits, here is a paranoid nation spending more than it can afford to buy up equipments without realizing of equipping our science and technology establishments to help prepare the armed forces to defend the nation. It is so easy to announce increased budgets for defence purposes wherein the MPs applaud standing up, knowing fully well that there is a share of the loot waiting for them from it.

Words fail me to express the inappropriateness of this defence trap that we are falling in, year after year. Even our PM plays only lip service with words of inclusivity of the dalits and the poor in the wealth sharing and growth. Truly, is there anyone out there really feeling sorry for them or doing something for the downtrodden, the hapless, and the hopeless poor denizens of the country. Therein rests the contrast. Truth always gets covered in the rhetoric which comes out of individual greed.

God save the poor Indians!