Expectations for relief and incentives on the taxes front seem to be huge ahead of budget presentation by finance minister Arun Jaitley. Competitive demands from industry to individual taxpayers, and exporters to farmers’ representatives seem to have inundated finance the minister’s inbox while the mood in North Block seems to be more poignant and measured. Twenty-four hours before budget presentation, a visit there is marked by silence in most corridors while the key budget people proceed with last minute preparations for the big day. Television channel anchors to print scribes and radio jockeys seem to have been sucked into the vortex of budget hysteria. While consultancies were busy peddling and lobbying till the last minute through the written word and TV shows, the people seem to be awaiting the moment finance minister Jaitley rises to read the much-awaited document.
In state capitals and into the interiors, the mood may not equal the excitement as one sees in the national capital region. As many veterans point out, the entire budget exercise has lost verve given that it is quiet on the indirect taxes front with the GST Council taking charge of levies on products and services.
On the direct taxes front, the expectations have hit the roof with both individuals and industry seeking some relief. But, one must admit that the middle class and salaried people may enjoy the first right on this government after having backed the ruling NDA in its difficult months of rolling out demonetisation of high value currencies and GST. Hence, it is natural that the expectation of salaried people should be a wee bit high with the notion that it is payback time for the government with doubling of tax exemption limits, revamping of tax slabs and allowing more money in banks. In the last budget Jaitley had kept the tax slabs largely unchanged except for reducing the tax liability by half to 5 per cent for those with income between Rs 2.5 lakh and Rs 5 lakh.
Section 80C benefits, medical reimbursements, doing away with the dividend distribution tax and bringing back the standard deduction, the list of demands are huge and possibilities seemingly limited. The finance minister will not be ‘favouring a few’ by conceding some of the demands, as this will fuel consumption-led growth he’s targeting to end on a high ahead of the next Lok Sabha elections. One does understand the revenue constraints, but then it was always balancing out between foregoing taxes to spinning growth proactively. Not only does spurring middle class consumption make economic sense, politically the budget package will be saleable given the elections to eight states in the next 12 months.
The second biggest section that will expect a good deal from the finance minister are farmers and rural people who suffered silently during demonetisation and GST roll-out. These people not only stood by the government through the structural reforms process, they also hailed its campaign against corruption from the sidelines. The rural voters and farmers may not aim for the skies but not supporting their aspiration to join the mainstream is evidently not on the cards.
Millions of industry and farm workers, especially from the unorganised sector, were hit by the Modi government’s reforms. They expect to be empowered economically and rescued from the throes of poverty and humiliation. Putting more money in the hands of people has always been the sure shot ‘mantra’ to keep the voters happy and manage the economy judiciously. If saint Thiruvalluvar and the master of state craft Chanakya continue to be the guiding force for this ‘pro-Hindu’ government of prime minister Narendra Modi, taxpayers will have to be treated with respect and they should be taxed only judiciously. A legal hawk like Jaitley and people’s man Modi would be expected to deliver on the big day.