Intro: The world economic history shows that the growth engine has resulted into some form of disparities. Therefore, setting the reforms agenda rolling, at the same time, keeping it more inclusive is the most difficult task. While preparing the Union Budget and Railway Budget of 2015-16, both the Ministers will try to balance between the expectations of various sectors of economy and addressing aspirations of a common man. Changing the growth engine and maintaining the space for general public intact is the way out to address these concerns. Organiser reviews expert opinions, sector wise expectations and common man’s aspirations:
If there is one event that captures the hopes, expectations, unmet desires and frustrations of the country, it is the presentation of the Union Budget on February 28 every year. Far from being a recital of the books of account of the Union Government showing its income and expenditure as its name suggests, it has emerged as the key statement of intent of the government, which uses the occasion to announce not just changes in taxation regimes and allocations to different departments and programmes but also all kinds of policy pronouncements and launch of new development initiatives. It has completely displaced the annual state of the Union address of the President to the joint sitting of the Parliament, mirrored of the English Crown’s Address, which is both a report card and lays down government’s statement of intent for the year ahead.
Providing conducive environment for propelling industrial growth is the need of the hour. The budget should focus on encouraging greater investments for setting up and expanding business. The policy road-map should signal a direction towards lowering the cost of capital and enhancing ease of doing business. Reduced interest rates will not boost investments and prop up consumer sentiment. The steps being taken to improve the ease of doing business need to be accelerated”.
Steps initiated towards simplified and predictable tax regime need to be accelerated to attract greater investments. Revenue estimates have to be set realistically and not forced as performance targets for the tax officials. This is required to bridge the trust gap between revenue authorities and the taxpayers. In the efforts to mop up larger revenues, aggressiveness in retrieving unaccounted monies may be required but due care has to be taken that new set of problems do not emerge”.
Government should provide the subsidy to organic farming rather than to the chemical farming. It will help in subtracting the depletion of environment and will reduce global warming. This will also encourage the farmers to opt for organic farming more in order to establish an ecological balance.”
Basic need goods and amenities should be made within reach of the poorer and middle classes along with social security benefits with special focus on homemakers.”
Controlling inflation should definitely be on top of the agenda for Jaitleyji. I am in favour of FDI in different sector so that the standard of some particular sectors improves. Since it is the first budget of the new government everyone expects something worthwhile. Hope the government won’t disappoint people.”
More simplified tax base to lessen the burden of taxpayers is immediately required. A booster dose is required to lift the infrastructure especially roads, power, heath and education.
Special monetary incentives should be introduced so that software companies can invest in research and development and develop outstanding software products.”
Another Cover Story: Expecting out of the box ideas
The forthcoming budget would be the first full budget of the Modi Government and one which it can claim full ownership. Last July’s budget, the first presented by Finance Minister Arun Jaitley, was built on the foundations laid by Chidambaram’s interim budget with its dodgy figures and the NDA had little time to work out its own detailed road-map. Despite this, it clearly established the government’s very clear commitments to fiscal prudence, to making government’s service delivery transparent and efficient, to tone up the state.
Other than the recent Delhi elections, the people have continued to repose faith in the union government, with the BJP winning State elections in Maharashtra, Haryana, Jharkhand and coming out very strongly in Jammu & Kashmir, a most unlikely event. Clearly the people have very large expectations and the Union Budget presents the opportunity to demonstrate how sab ka saath, sab ka vikas would be actualised. What does ‘Make in India’ mean in terms of government policy? Would the ‘Swachh Bharat Abhiyan’ revolutionise the quality of life of the poor? And how would ‘Jan Dhan Yojana’ enable the poor and the disadvantaged to become more active participants in the economy?
While India needs to widen the tax base, it must also not penalise the honest taxpayers at the lower end of the taxpayers net who often resent that the big cats escape because of the corrupt and inefficient system. Leaving more money in the hands of the small taxpayers is also more beneficial to the economy as their propensity to spend is higher than the propensity to save. So the first thing the Finance Minister must announce is an increase in the exemption limit to at least Rs 4 lakh, and that of working women to Rs 5 lakh.
Another Cover Story: Travelogue of a Passenger
Any loss of revenues can be made good by reducing the number of exemptions that corporate tax system has in place. While some bossiness do benefit from such exemptions, for many the increased cost of compliance and related litigation is something they would happily do without. It is not so much the rate, though no one is asking for sky high rates, as lack of complications and clarity that business desires. Simplification, transparency and certainty is an integral part of improved investment climate, something this government is committed to.
Another Cover Story: Neglected for Six Decades
In fact, the government considers switching to tiered corporate tax rates, i.e. keep existing rate for large companies and progressively lower for smaller companies. Smaller companies should also be incentivised in various ways e.g. exemption from service tax instead of creating a tax asset, debt financing options, etc. Goods and Services Tax (GST) is expected to help in increasing the collection of revenue and reducing significant costs, hence, a clear roadmap of convergence of the various indirect tax laws into GST and implementing the same should be specifically laid out. While the roll-out of GST is much awaited, pending that government should consider reduction in service and excise tax rate, which is also on the wish-list of people. At present, the rate of service tax and excise duty is 12 per cent each. This would help widen the tax base, bring in self-employed professionals, facilitate higher compliance and lead to increased revenue.
Urbanisation is a fact of life and this government has shown its commitment to facilitate this process. The decision to set up 100 smart cities has to be followed up by working out the detailed policies including taxation regimes that would attract the private sector, whose participation is key to the proposal taking off. Existing urban areas are also expanding and are in dire need for up-gradation.
‘Housing for All’ needs priority, but too often governments confuse that with allocating more money. A smarter approach would be to build synergies and have clear accountable goals and outcomes, a move away from input-based governance. The universal affordable housing objectives can be achieved faster and with less money if the government thinks of providing settlement level services to people who already have houses. This way the artificial housing shortage (of people who live in sub-standard housing) can be filled, with less than half the money and administrative hassle it would take to build houses. The Mumbai SRA model housing is not a model that can work outside the peculiarities of Mumbai, or maybe parts of New Delhi. In fact, in line with Prime Minister's vision of 'less government, more governance', the budget should make it clear that publicly subsidised redevelopments can go out of the window. There is a CAG report that says how much of a waste of money an earlier programme, Basic Services of Urban Poor (BSUP) was, but disregarding that UPA went ahead and launched the non-starter Rajiv Awas Yojana (RAY). The government should be funding public toilets in areas where there are large day-time populations and where there are night-time floating populations. For household toilets functioning water supply and sewerage off-take arrangements should be the priority. So the main thing is to invest in public infrastructure, and toilets take care of themselves. The approach to public infrastructure, particularly water supply must change. Better management practices including using community and private providers with public supervision could deliver better services.
Urbanisation would not be complete with improved mass transport facilities. Bad planning and implementation of Delhi's BRT corridor should not take away from the desirability of bus-based mass transit. This is much more affordable and quicker to implement than metros, which work best where considerable population density is? A clear and differentiated policy of financial support to states and cities can deliver
Though there are many other expectations that the Union Government has to satisfy like making inflow of FDI smoother, creating conditions for making India a global manufacturing hub, improving access to finance for small and medium enterprises, there is one that affects a large number of Indian families and that is the import duty on gold. Now that the pressure on the trade deficit has abated, partly due to soft petroleum prices, import duty on gold should be reduced by half, to 10 per cent.
There are sky high expectations riding on the shoulders of Prime Minister Narendra Modi and Finance Minister Arun Jaitley, and they have a unique opportunity to set India on the path to high economic growth that would make the stagnation and cynicism of UPA a forgettable nightmare. India needs, in fact demands, change and it is expected that Modi Government would live up to the challenge.
Shakti Sinha (The writer is a retired civil servant)