Yesterday when the FM read out the budget there were many in the market who cheered and there were others who felt it was damp.Let us dig deeper into this.
The Numbers:
To start with 6.8% of Fiscal Deficit (on GDP) is not a very good news but the FM said that it would be partly compensated for by borrowing from the market and the remaining by printing notes.
What is it,apart from numbers?
It was a purely scheme-oriented budget rather than a growth-oriented budget as some pointed out, as the govt's major concentrated was on funding its flagship schemes rather than introducing any fresh ventures as it promised before coming into power.NREG got a whooping 144% fillip,Bharat Nirman was also taken care of well(with a 45% boost).IITs and NITs got 2113Cr and Rs450 for starting new IITs and NITs,apart from other plans such as, starting new branches for the Muslim University etc ,for the educational system.Increasing the relaxation band for Education Loan came as a pleasant surprise,would be of great help to the weaker sections,which was probably,some speculate,Rahul Gandhi's suggestion.What I loved the most was the concept of upgrading the polytechnics,under the skills-development initaitive.per se Education was handled intelligently and initiatives such as these would take us a long way.
For the Corporate:
Now,if we dive in deeper,Fringe Benefit Tax has been relaxed.Great News,eh?Only if you are an employer.It's just that the FM removed the FBT thorn from the corporate and thrusted it in the side of the employee,as ET put it.There would be absolutely no difference for the government which earns around 8k INR from this.Relaxation of this(introduced by Mr.Chidambaram and is termed as "nuissance tax" by many)also reduces the paperwork for the corporate(esp.IT).Now ,it is the employee who pays out(indirectly) for beneits like,prizes,gifts,concessional travel and stay and scores of other benefits for which the employer used to pay the tax previously.But increase of MAT from 10 to 15% might prick the corporate sector real hard,but if we look at it this way,that the credit period has only increased(7 to 10 yrs),so,even if you pay heavy taxes this year you reap the dividends later.
A brick here,a stone there
While increase of savings on personal income tax as exemption,from 1.5lakhs last yr to 1.6lakhs for men and 1.9lakhs for women,might not affect many lives,hiking it by 15K for senior citizens might sure help.Wiping out the surcharge completely might also fatten a few wallets,esp. those earning more than 10lakhs p.a.
Farmer perks are ,as was expected, good.All in all it was just the aam aadmi ka budget,which might not have pleased the corporate sector guys much,but what anyone would appreciate is the fact that taxes were not increased,they were just rationalised and also the FM has promised to introduce a new Direct Tax Code in the next 45 days,which many feel might put an extra burden on the fiscal deficit,which I presume they are planning to cover using the rationalisation receipts,disinvestment and the 3G auction coming up.Identifying sustainance of the GDP at 9% as the immediate challenge is also laudable,given the fact that this will act as the economic surplus that aould be needed to improve our standards of living,esp the bourgeoisie.
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