Budget Derailment in UPA II
PRANABDA presented his Budget II of UPA II yesterday, again dedicating it to aam aadmi. It is a different matter that the budget is prepared in consultation with big business houses and aam aadmi is never approached to know his expectations from this annual exercise. There has been a lot of media hype about various entitlements therein and yet some more serious thought is required. Before I begin, let me add that the sensex that measures the trust and expectations of market players, has given thumbs up.
FIRST, the subsidies have been cut by about 15,000 crore rupees, direct taxes have been slashed by more than 11,000 crore rupees while indirect taxes have been raised by almost the same amount. All of us know that a cut in subsidies and raise in indirect taxes affect the poor more while reduction in direct taxes benefits the rich.
SECOND, the raise in the income tax limit from 1,60,000 rupees to 1,80,000 rupees has been highlighted by the media. Here we must know that only 3% Indians pay income tax out of which 2%, for being regular staff, have to compulsorily pay the same. Therefore, the issue of income tax hardly concerns 1% of the people. Otherwise too, how much difference in saving rupees 171 per month can have a positive impact, that too at a time when inflation rate is too high and petroleum prices are shooting through the roof? Besides, the subsidy on LPG is being withdrawn completely adding a burden of more than rupees 350 per cylinder or per month.
THIRD, Pranabda has decided to replace subsidies on kerosene as well as fertilisers for BPL category with cash transfer. Will the FM enlighten us about how many BPL families actually own land and how much fertiliser they use? The fact is, most of the people below poverty line are either share croppers or farm labour without any agricultural landholding. Also, how will the cash be transferred while majority of the stakeholders do not have a bank account?
BESIDES, without levying any additional tax how will the FM bring fiscal deficit down? Here we must remember that in the current fiscal lowering of fiscal to 5.1% was made possible through the sale of 3G spectrum which was not a part of the original budget. While the FM said nothing about bring the black money staked in tax heavens back, the deficit may rise further.
THERE are other lacunae in the budget as :
1. Nothing has been said to improve the condition of the people in the unorganised sector. Mr. Rahul Gandhi, when Rupees 71,000 crores were released to bail out farmers from institutional loans, had said that something will be done for this sector too. When will the time come?
2. The budget for flagship schemes like MNREGA has not been enhanced while the wages under the scheme have been linked with inflation. Where from the additional money will come?
3. Members of NAC, led by Mrs Sonia Gandhi have pointed out that allocation for health is not going to improve the health of the poor. Similarly, allocation for education is much lower than the demand. Where is the outcome budget as promised by Mr. Chidambaram in 2006? What measures are being taken to check the leakage in the PDS, NREGS. ICDS etc. Nothing has been said about land acquisition policy as also the rehabilitation policy, the draft of which was circulated in 2007.
Finally, the annual budget is a monotonous exercise that tells about income and expenses. Pandit Nehru, in his Tribal Panchsheel had said that the progress of (weaker sections) tribals must be judged not in terms of money spent but in terms of human character evolved. Where has the message gone?
YET, the budget sends a politically correct message to the five states in which elections are due in April-May. The same can be said of Railway Budget. But be ready for some harsh measures after the elections are over, even before the monsoon session of parliament.
FIRST, the subsidies have been cut by about 15,000 crore rupees, direct taxes have been slashed by more than 11,000 crore rupees while indirect taxes have been raised by almost the same amount. All of us know that a cut in subsidies and raise in indirect taxes affect the poor more while reduction in direct taxes benefits the rich.
SECOND, the raise in the income tax limit from 1,60,000 rupees to 1,80,000 rupees has been highlighted by the media. Here we must know that only 3% Indians pay income tax out of which 2%, for being regular staff, have to compulsorily pay the same. Therefore, the issue of income tax hardly concerns 1% of the people. Otherwise too, how much difference in saving rupees 171 per month can have a positive impact, that too at a time when inflation rate is too high and petroleum prices are shooting through the roof? Besides, the subsidy on LPG is being withdrawn completely adding a burden of more than rupees 350 per cylinder or per month.
THIRD, Pranabda has decided to replace subsidies on kerosene as well as fertilisers for BPL category with cash transfer. Will the FM enlighten us about how many BPL families actually own land and how much fertiliser they use? The fact is, most of the people below poverty line are either share croppers or farm labour without any agricultural landholding. Also, how will the cash be transferred while majority of the stakeholders do not have a bank account?
BESIDES, without levying any additional tax how will the FM bring fiscal deficit down? Here we must remember that in the current fiscal lowering of fiscal to 5.1% was made possible through the sale of 3G spectrum which was not a part of the original budget. While the FM said nothing about bring the black money staked in tax heavens back, the deficit may rise further.
THERE are other lacunae in the budget as :
1. Nothing has been said to improve the condition of the people in the unorganised sector. Mr. Rahul Gandhi, when Rupees 71,000 crores were released to bail out farmers from institutional loans, had said that something will be done for this sector too. When will the time come?
2. The budget for flagship schemes like MNREGA has not been enhanced while the wages under the scheme have been linked with inflation. Where from the additional money will come?
3. Members of NAC, led by Mrs Sonia Gandhi have pointed out that allocation for health is not going to improve the health of the poor. Similarly, allocation for education is much lower than the demand. Where is the outcome budget as promised by Mr. Chidambaram in 2006? What measures are being taken to check the leakage in the PDS, NREGS. ICDS etc. Nothing has been said about land acquisition policy as also the rehabilitation policy, the draft of which was circulated in 2007.
Finally, the annual budget is a monotonous exercise that tells about income and expenses. Pandit Nehru, in his Tribal Panchsheel had said that the progress of (weaker sections) tribals must be judged not in terms of money spent but in terms of human character evolved. Where has the message gone?
YET, the budget sends a politically correct message to the five states in which elections are due in April-May. The same can be said of Railway Budget. But be ready for some harsh measures after the elections are over, even before the monsoon session of parliament.
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