FMís balancing act: stay tuned for more
The Union Budget was on the expected lines, but its unique feature lay in the fact that it tried to touch the lives of all Indians in a subtle yet constructive manner. By stressing on pro-poor schemes and pro-agro packages, the Finance Minister played in accordance with the limitations set before him by the Left parties.
Striking a fine balance between reforms and socialism, he was able to satisfy social, political and economic obligations with consistency. The real test will, however, lie in the efficient implementation of these policies.
The Finance Minister freed the taxable salary-earners' earning up to Rs 1 lakh from income tax, but imposed a 2 per cent surcharge on all taxes to fund education and mid-day meal schemes in schools.
He abolished the long-term capital gains tax and reduced the short-term capital gains tax to 10 per cent from 33 per cent, imposed a 0.15 per cent turnover tax, prompting the bears to take charge of the stock market.
However, this usual pessimistic reaction should not worry long-term investors, as the genuine investors are not going to shy away from the market due to the imposition of this nominal tax. This was clearly observed when the Sensex gained 102 points the next day after losing 112 points the previous day.
By raising the FDI limits in insurance, civil aviation and telecom sectors, the government has finally given a green signal for increased investments in these sectors. Projects on rural and micro irrigation, drinking water and rain harvesting are all progressive steps.
The Finance Minister's decision to remove excise duty from dairy machinery, tractors, handlooms, power looms and computers will make the agricultural, textile and IT industry financially more viable.
However, the Finance Minister neglected environment, tourism and sport, where much needed to be done. The Budget also acquired a rosy hue because petrol, diesel and cooking gas prices had already gone up. The rise in expenditure on defence is also being looked at with suspicion.
The 4 per cent excise on steel, though expected, will make many goods more expensive. The Prime Minister allayed fears of growth in inflation arising from vast amounts of proposed government expenditure by keeping the revenue deficit in check, yet there persists a niggling doubt whether he can convert dreams on paper into reality on ground.
Woven fine, but feels rough
Chidambaram's Budget is like a synthetic cloth, which looks very beautiful, but is uncomfortable when worn. It is basically a populist budget which tries its level best to please all segments of society, but in no case it seems to be growth-oriented or development-oriented, even though top economists, including Prime Minister Dr Manmohan Singh, is also involved at every step.
It seems that the FM has applied the theory of politics more than he has applied the theory of economics. Chidambaram's Budget may be politically balanced, but it's not an economically dynamic Budget. The target of 8 per cent GDP also seems to be like Mona Lisa's smile, but the cost-push and demand-pull inflationary spiral is likely to be more than the growth rate, which is likely to hurt the common man.
MANOJ DAYAL, Hisar
Nay, a political Budget
Chidambaram's Budget is a political Budget. He is trying to keep the allies happy. In this Budget, he has broadly given us an idea of what his government proposes to do, but how it will achieve that is still a big question.
There is no doubt that all the right areas, like water management, sops to the agricultural community, healthcare and education, have been addressed, but there is a lot of ambiguity on how these monstrous issues will be resolved.
The fall of the Soviet Union has shown that no government alone can solve the problems of the common man. A robust economy and the character of the common man make or break a country. Since Independence, we have witnessed big and ambitious schemes failing in the absence of clean and efficient government. Let us hope history does not repeat itself.
SIMMI PATHAK, Amritsar
Proposed IT structure is unfair
The proposed income tax structure is discriminatory for the taxpayers with income above Rs 1 lakh. The individual in the 1-1.5 lakh bracket shall be paying a tax at the rate of 38 per cent, as there is no change in the IT slabs. A taxpayer filing 1.01 lakh returns shall be paying Rs 9,200 in tax, leaving only Rs 91,800 in his pocket, while the non-taxpayer, at Rs 1 lakh return, shall pocket the full amount of Rs 1 lakh. The cut-off limit is too heavy. The benefit of exemption of Rs 9,000 should be passed on to all the taxpayers.
Well if Mr Chindambaram wants to reflect a social change and equality while changing the tax structure, he should do it at one go and leave money in the hands of the people for more investment and individual development. The national economy is based on individual incomes. Lowering the interest rates has added much more to national development. At least, this structure should be rationalised by taking out a proper share of the government from individual incomes. This could be one way of rationalising tax: 1/5th share or 20 per cent tax above 1 lakh to 5 lakh, ľth share or 25 per cent tax above 5 lakh to 10 lakh, 1/3rd share or 33 per cent tax above 10 lakh.
At least each individual will know how much tax or government share one is required to pay. This will reflect a good individual economy and provide enough money for investment and development. Mr Chindambaram has totally forgotten the exorbitant fee structure in professional institutes while asking for education cess.
B. S. AGGARWAL,
We should sacrifice self-interest
There is a genuine concern for a common man in the Aam Aadmi Budget. The neglected sector of agriculture has been given due consideration. Farmers will be benefit the most. Irrigation has been given importance by reviving the traditional water bodies. Concession has been given to the food processing and agro-based industry.
Overall there is focus on agriculture, water, health, education and social sector. All this will increase rural income and work as a booster dose for the economy and enable us to meet the expected GDP growth rate of 7 to 8 per cent. Even though there is now 2 per cent cess on all taxes. But we should sacrifice our own interest for a noble cause like primary education.
The real test for this budget is a proper implementation. Otherwise, the "Aam Aadami" will achieve nothing. Only accountability and quality governance can make the system deliver.
DR MAHABIR NARWAL,
Bring back our crores, Minister
Chidambaram's Budget has totally ignored those who have retired from the PSUs. They are now on the verge of starvation because of wrong policies of the NDA government, which was pro-capitalist. Will this government do something to get back crores of rupees that the non-banking finance companies have looted from public?
Will Mr Chidambaram restore the rate of interest prevalent in 1997-98, on which retired employees had based their planning for the remaining life, or provide these people with some relief package as has been done for farmers?
O. N. CHHABRA, Nangal
FM leaves old men at sea
From the view of pensioners, except specifying the 9 per cent rate of interest for deposits in banks on their life savings, nothing has been done for them. Pensioners were repeatedly pleading for exempting pension benefits from income tax, which has not been done. Tax relief for income up to Rs 1 lakh is not going to give any relief to those who have been earning marginally more. Let the Finance Minister clarify on the actual implementation of the raised IT limit.
Pensionersí main source of finance is accumulation in provident funds. The salaried class uses its savings only after retirement, but the 12 per cent rate of interest has not been restored. The pensioners will be allured to sink their savings in investment.
The Finance Minister is silent about the future of Pay Commissions; scrapping of the New Pension Scheme implemented with effective from January 1, 2004, and restoring the old pension scheme; and nominating one pensioner as Member of Parliament in the Rajya Sabha.
The Finance Minister has omitted the formulation of health scheme for pensioners living in areas not included in the CGHS Scheme. The Fifth Pay Commission has already recommended the same, followed by a relay of lower court/High Court/ Apex court judgments specifying the immediate need for the same. A large number of pensioners have died for want of proper treatment and health cover. Neglecting them is wilful defiance of the law. The situation is: "Will the future buy us more life, or just more days alive."
ONKAR SINGH RIAR,
The salaried class will have to pay
This Budget is inauspicious for the salaried-class. Instead of relief in taxes, the salaried class will have to pay a cess at the rate of 2 per cent. The government is filling its treasury by cutting into our individual budgets. Relief up to Rs 1 lakh is welcome, but the others have been penalised so that a few could benefit.
Service tax has also been increased from 8 per cent to 10 per cent, which would bring the hike in prices. We expected a better deal from such intellectuals and top economists as Finance Minister P. Chidambaram and Prime Minister Dr Manmohan Singh, who have now the good fortune of working together. To rollback these additional taxes is must for the government and the same goes for the 0.15 per cent transaction tax on sale/purchase of shares.
S. K. NAYAR, Panchkula
He could have done better
The P. Chidambaram Budget seems to be quite balanced and sensitive. The whole country will be equally benefited. It would have been much better for the salaried class if the limit of standard deduction had been raised to Rs 1 lakh for all and the plight of the ex-servicemen were taken into consideration. The issue of one rank one pension is long unresolved.
Col BEANT SINGH (retd),