The annual central budget is round the corner and Pranab Babu must be getting the jitters as how to have a blanced budget. As the next Lok Sabha elections are also not around, he cannot go in for a populist budget. The inflation rate especially of food articles is already too high and now the crude oil prices are also on a rise which won't make his life any easier. Though he has some of the best economists that the world has ever produced as his advisors but the recent onion debacle has shown that they are not getting their predictions correct. The MREGS has raised the wages which is making the supply of labour short and also increasing the cost of production in other areas. We can always argue on whether the hike in MREGS rates is valid or not but the bourgeois producer s blaming for the increase in the prices of manufactured goods. The tax system requires a revamp and a bold initiative so that instead of raising the rates, let the base increase or in simple terms let the number of people paying the tax increase. If we were to make a wish list for Pranabda it would be too big but there is a personal request that please tax agricultural income. It is one thing that is long being needed and anticipated. We could also do with a simple tax filling system (another Saral not required) and more transparency. I would revist this peice after 28th February when Dada has presented his budget and lets see what the present day Kautiliya can come up with.
Bye
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I am totally in arms with you for taxing agriculture and reducing the tax rate and expanding the base. But what our pipe smoking economist should ensure is that his cuts benefit the right dispora (Namely the middle class) and not the fat cats.
ReplyDeleteOur FM's seems to like taking bold calls and end up benefiting the totally wrong set of people. (I refer to cutting petrol subsidies when inflation was anyways galloping, pvt oil firms have definately gained from it but can't say that for the general public)
Then again, talking of inflation, tax rates and interest rates arent the only two ways to cut inflation, the third (and for me the most important) way is to improve productivity & effeciency, which the FM will completely overlook coz his horizon dosent seem to be more than 3-6 months.
As we know about India, the root cause of most problems is Population and infracture, and the same factor is the biggest contributor to inflation, India is not short on production for food articles it is the distribution backbone that has crumbled under the population explosion, I hope he does something to stop hoarders and arbitragers who have hogged the distribution system, so instead of banning speculative trading of goods, if he does something to clinically dismantle the system, I would be at my happiest.
But at the end of the day, if you look at any of our budgets, they are all, in essence, identical. They will talk about Lack of education, umemployment, upliftment of women and backward classes, empowering the farmers, and the flavour now a days is that of "Economic Superpower". But there wont be any followup on the same schemes that were announced last years and some more futile, useless schemes will be launched this year, Just to make the government seem to be doing something about it.
But when the dust settles, rest assured that the only one social class that will loose out in all the schemes, policies and packages is the middle class, the only thing that remains to be seen is to what extent..