No ‘Poll-Pulist’ Schemes and Car­rots

FM fo­cuses on ru­ral econ­omy, in­fra growth, digi­ti­sa­tion & ex­pand­ing rev­enue base

The Economic Times - - Budget: Day After -

ev­ery In­dian, but also to those who look to in­vest here.

The present gov­ern­ment has taken very se­ri­ously the task of clean­ing up the po­lit­i­cal fund­ing sys­tem. The in­tro­duc­tion of an in­no­va­tive Elec­toral Bond scheme un­der the RBI and re­duc­ing cash con­tri­bu­tions from .₹ 20,000 to .₹ 2,000 are com­mend­able moves to­wards this ob­jec­tive.

Shar­ing data from its re­cent de­moni­ti­sa­tion drive, the fi­nance min­is­ter re­vealed that there has been a tax rev­enue in­crease of 17% over the last year.

In fact, the FM went to the ex­tent of show­cas­ing his data­base by quot­ing a plethora of sta­tis­tics gained from data an­a­lyt­ics.

One must also ap­plaud the gov­ern­ment’s man­i­fold at­tempts to widen the tax base, whether it be through data to dis­cern ar­eas of tax eva­sion or through cre­at­ing an en­vi­ron­ment that fos­ters com­pli­ance.

While larger com­pa­nies are likely to be a bit dis­ap­pointed that the cor­po­rate tax rate has been left un­touched, the sil­ver lin­ing is that there are no ad­verse im­pli­ca­tions for cor­po­rates from the Bud­get. It is very clear that the gov­ern­ment has left no stone un­turned to power all en­gines of the econ­omy to re­vive de­mand.

Bring­ing the af­ford­able hous­ing sec­tor un­der in­fra­struc­ture sta­tus, will def­i­nitely pro­vide a much-needed fil­lip to the hous­ing sec­tor which has been reel­ing un­der the im­pact of de­mon­eti­sa­tion.

The real es­tate sec­tor, which con­trib­utes close to 8.5% of GDP and re­mains the high­est em­ployer amongst BPL fam­i­lies, re­mains a ma­jor gainer as long-term cap­i­tal gains have been cut to two years. Along with its fo­cus on in­fra­struc­ture devel­op­ment, this is ex­pected to have a mul­ti­plier ef­fect and aid in GDP growth. SMEs, which ac­count for 96% of reg­is­tered com­pa­nies, have suf­fi­cient cause for cheer as their tax bur­den has been re­duced. This move is laud­able as the sec­tor ac­counts for sig­nif­i­cant em­ploy­ment and is a crit­i­cal lever of the econ­omy.

It is hardly sur­pris­ing that the Bud­get sticks to its ear­lier path of fis­cal pru­dence with a tar­geted fis­cal deficit of 3.2% whilst bal­anc­ing en­hanced spend­ing in so­cial sec­tor.

This is par­tic­u­larly im­por­tant in the long term and for cor­rect­ing in­fla­tion, es­pe­cially in the face of ris­ing US rates.

Over and above that, there is no deny­ing that digi­ti­sa­tion can have the sin­gle greatest trans­for­ma­tional ef­fect in in­creas­ing trans­parency and curb­ing cor­rup­tion.

Over­all, I con­grat­u­late the fi­nance min­is­ter on de­liv­er­ing a bud­get which avoids pan­der­ing to pop­ulist ex­pec­ta­tions while main­tain­ing its keen fo­cus on boost­ing ru­ral econ­omy, in­fra­struc­ture growth for long-term as­set cre­ation, pro­mot­ing digi­ti­sa­tion and ex­pand­ing the rev­enue base.

ARINDAM

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