The budget could be a joy to behold. For the first time ever, the government will have no excuses for business as usual, sloppiness, inaction and bad behaviour.
As the Modi government prepares its initial budget offering, here is a compilation of some essentials the budget has to contain. Individual recommendations will be discussed in detail over the next three weeks — for a discussion of how corporate tax rates should and must be reduced, see ‘No more bandaid tax policy’, (IE, June 7). Incidentally, that article forgot to include, in the high 30 per cent effective tax rate paid by Indian corporations, the 2 per cent tax via the misguided corporate social responsibility levy.
The budget vision document should clearly emphasise the following. First, that there is a structural change implied in the mandate of the people. The mandate does not involve a shift from Tweedledum to Tweedledee. The mandate is not what happens in George Orwell’s Animal Farm: “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which”. In short, the budget should be different from Congress budgets.
It is also nobody’s case, least of all mine, that Budget 2014-15 will suddenly make everything right; will magically make the economy grow and provide jobs to the jobless and toilets to those who don’t have them today. But the budget will be misguided, and the voters’ wrath shall descend, if it does not contain a vision and a roadmap of what will be done in the next three years. The budget must also outline the economic philosophy of this new government and how is it different than what the people have just recently, and overwhelmingly, rejected.
Some key policy concerns and initiatives expected in Budget 2014-15 are as follows.
On retrospective taxes, the latest defence of the most retrogressive (Neanderthal?) policy ever initiated by the Indian government is that it cannot reject, reverse and remove this legislation because the CAG will ask for an explanation of the potential litigation-dependent revenue loss. I am not a lawyer, but let me see if I get the argument right. Before former finance minister Pranab Mukherjee introduced this legislation in his reverse pathbreaking 2012 budget, there were no retrospective taxes. Indeed, the government had to introduce new laws in order to invoke the new stupidity. The CAG is just an arm of the government that attempts to ensure that government expenditures and revenue collections are properly accounted for. It is just an auditing agency, definitely no …continued »