The choice for Arun Jaitley is difficult. He has to demonstrate concern for the masses, as the BJP promised in its manifesto, but he also has to take care of investments, which would come with the growth of the corporate sector
The Union Budget is all set to be presented. The country is awaiting to see how Union Minister for Finance Arun Jaitley makes innovations to fulfill the BJP’s promises to make India ‘Ek Bharat, Shrestha Bharat’ that would ensure that the country gets on to a new economic pedestal. Beset with a difficult economy Mr Jaitley has to do a lot. He has to take steps to ensure that prices not only come down but also remain stable.
How he innovates, remains to be seen. Growth in agriculture, empowerment of Dalits, weaker sections and women, enhancement of healthcare, are all part of the BJP manifesto. Mr Jaitley should not get obsessed with high speed but consolidate the transport system.
The burgeoning deficit is a concern. The economists from the economic think-tank like National Institute of Public Finance and Policy have a different viewpoint. They do not consider deficit as a deterrent. Instead, they consider it to be a necessity for the successful implementation of the welfare programmes and development of the masses. They say that no Government could achieve its objectives of development, if deficit remained a concern. Deficit, according to them, should be utilised for investment in infrastructure, core sector and the welfare projects. It has a multiplier effect. It generates jobs, benefits percolate and accelerates development process.
The choice for Mr Jaitley is difficult. He has to demonstrate concern for the masses, as promised by the BJP in its manifesto, but he also has to take care of investments, which would come with growth of the corporate sector. A balancing act is not easy.
The deficit has its problems too. It leads to larger borrowings. The present Budget is composed of almost 50 per cent borrowings. But this deficit, as enshrined in the UPA’s interim Budget, does not address the concern of the masses. Rather, the masses were the worst hit as most of their programmes suffered the biggest cuts. Now, it is established that the 10 years of UPA shows GDP growth and also phenomenal rise in the number of those without jobs. Under the broader economic revival, the BJP has to accord high priority to job creation and opportunities for entrepreneurship.
So, should Mr Jaitley consider the formula of the two BJP leaders, Mr Subramanian Swamy and Mr Nitin Gadkari for income tax abolitionIJ As it appears, he is not doing it for now, though he may tweak the exemptions a bit. The abolition literally is not going to cause any loss to the Government. Whatever is notionally lost could be made up by reducing the size of the not-so-honest Income Tax Department.
The Finance Minister should consider freeing the bank deposits of tax deduction at source. It has led to severe sufferings of the small depositors and the retired. They are subjected to TDS on small fixed deposits and have tremendous problem in recovering the taxes that they are not supposed to pay. The women and the senior citizens find it difficult to go through the unnecessary burden of filling Form 15 and complying with other formalities. Abolishing it will help them. It would not impact his deficit either. Much of the extra expenses that people make could be saved to pep up the economy and save them from harassment.
The focus of the budget on the farm sector would be a welcome move for more than one reason. It would boost the farm sector and give a fillip to the rural economy. The much-desired objective of development and growth could be achieved through this process. It would increase rural income, purchasing power of the downtrodden and have a rebounding impact on the growth of the manufacturing and industrial sector.
It is easier said but when it comes to doing it, the Finance Minister faces a revenue kitty which has virtually little to spare. His objectives, enshrined in the manifesto, are not easy to achieve. He cannot borrow more. The more he borrows, the more the inflation apart from causing paucity of funds for the other borrowers.
Mr Jaitley has little room for reducing his expenditure on salaries, staff benefits, maintenance and other sundry expenses. His expenses on police, para-military and security are growing. He is facing a conflict of opening up Government recruitment and reduction of work force. If Mr Jaitley has to reduce expenses, he has to cut the work force and if he has to pep up development, he needs to open up the recruitment process.
The Finance Minister may promise to develop high impact domains like labour-intensive manufacturing (textile, footwear, electronics assembly, etc) and tourism. He can also think of strengthening traditional employment bases of agriculture and allied industries, and retail — through modernisation as well as stronger credit and market linkages.
He may also think of harnessing the opportunities provided by the upgradation of infrastructure and housing, for its job-generating potential.