Slew of Incentives to Ensure Headstart for India’s Startups
The government wants to clean up political funding and has framed a proposal to issue electoral bonds, which will enable political parties to get funds through cashless transactions and keep the identity of donors under wraps. The Centre has armed taxmen with sweeping powers to conduct searches and surveys, a move that’s made industry jittery, which fears arbitrariness and harassment.
improve honesty and transparency in political funding, but these are toothless. He has slashe d the limit for anonymous cash donations from ₹ 20,000 to ₹ 2,000 per donor. As laundering of high-value notes showed earlier, such curbs are easily evaded. Political managers can simply raise number of bogus donors tenfold.
Anyway, only a tiny fraction of political money ever enters party registers, so the new measure cannot cleanse politics. Jaitley has proposed electoral bonds to attract legitimate political donations, but the truth is that donors don’t want the legitimate route any more than political parties.
Cash transactions of more than ₹ 3 lakh have been banned. But how will thisbeimplemented?Theruraleconomy is still mostly cash based. So is jewellery. The police-judicial system is overloaded and hardly capable of enforcing the new measure.
By lowering the income-tax rate on the bottom slab from 10% to 5% and imposing a 10% surcharge on higher slabs, Jaitley has transferred the tax burdenfromthelowermiddleclassto the upper middle class. By itself, the new 5% rate is hardly likely to improve India’s pathetic tax compliance. Far more promising is Jaitley’s aim to use data mining of demonetisation and GST to reveal inconsistencies and evasion. Tough follow-up action can greatly improve compliance in the medium term.
Over 90% of FDI proposals already go by the automatic route. This makes possible the abolition of the FIPB. FDI in strategic areas (defence, telecom) will still need clearance.