By K R Sudhaman
Come January, rent-seeking starts from various pressure
groups for tax sops and other concessions in the budget and it is always a
tight rope walk for any finance minister as lobbyists, industrialists,
agriculturists, exporters and so on seek relief but none will advice the
government on how to mop up additional resources for various social
infrastructural schemes, which are equally important.
But one advantage Finance Minister Arun Jaitley has this
time is that he will be presenting only an interim budget and he will have the
privilege of presenting a populist and please-all budget with an eye on the 2019
elections and leave the difficult task of mobilising resources and fiscal
prudence to the next government.
But whosoever comes to power, it is going to be a tough
task for managing the economy, which is in a mess because of a monumental
blunder – demonetization, which has set the clock back on economy by several
years, analysts say, adding that the budget will not be without big ticket
announcements if not reforms.
Technically there is nothing called interim budget. Every
budget is a budget by itself. Usually budget is presented once a year excepting
in the election year when the outgoing government presents just a vote on
account to seek parliamentary approval for government expenditure for the first
four months of the new financial year beginning on April 1 so that there is no
constitutional crisis in spending until the new budget is presented by the
newly elected government on assuming office in May.
But lately outgoing governments, deviating from the past
convention, have been making a few populist but election-oriented
announcements, basically a sort of election promises, along with vote on
account.
There are already talks of salaried class getting some
income tax relief. But there is also a view why should an outgoing government
provide tax sops to salaried class, which is not a vote bank for any political
party. Still there are expectations that income tax exemption limit will be
raised to woo the middle class. This is something which no new government will
attempt to reverse.
Renowned economist and former chief statistician Pronab
Sen says some are already talking of raising income tax exemption limit but
this will not “cut much ice” with voters as salaried class form a very small
percentage of voters in the country.
But more importantly the Modi government, like any other
in the past, will certainly utilize the opportunity to make big ticket
announcements in the budget, which would be virtually the ruling party’s
economic manifesto ahead of elections.
Two areas that needed immediate attention are farm sector
and massive loss of jobs, particularly after demonetization. The Modi
government has always been very good at making big announcements but fell short
on implementation, Sen said.
Both Sen and N R Bhanumurthy of NIPFP were of the view
that there will definitely be major announcements for rural and farm sector,
which is in doldrums particularly after demonetization.
Certainly Modi government cannot announce a populist farm
loan waiver as it has been hijacked by Congress president Rahul Gandhi and
other opposition parties and if the BJP government announced any such loan
waiver, it would be seen as reactionary measure.
What is more likely is a universal income scheme on the
lines of Ryota Bandhu scheme, the one launched by regional TRS party government
in Telangana, which helped K Chandrasekhar Rao to come back to power in the
recent assembly elections, they said.
But the headache of implementing such a massive scheme
will be left to the new government, which will have to grapple with it as
finding resources at national level is not going to be easy.
Sen said income support as against price support may work
in southern states barring Kerala as they follow the ryotawari system, where
the farmer owns and tills the land. In Northern India, it is difficult to
implement farm income support schemes as persons owning land and tilling the
land are different as they follow the tenancy system, where tenants till the
land and not the owner. The problem will be how to provide income support to
the tiller and hence makes implementation complicated.
Some sops are likely for small scale sector, which is
facing huge NPAs particularly after demonetization. Mudra too has been a good
scheme but bad in implementation.
It will take years for the new government to set right
the irreversible damage that demonetization has caused to the economy, Sen
said.
The fiscal situation and growth slowdown are worrying and
actual numbers would be known only in June and by that time the new government
would have been elected and that would have to face the music, Bhanumurthi
said.
There is bound to be major announcements to rural
development and farm sector, Bhanumurthi said, adding that being an election
budget there will be some big surprises.
The Indian real estate sector, after years of slowdown,
has done well last year, according to CREDAI. Realty developers, therefore, expect
some sops and major boost from the government in the upcoming budget. (IPA Service)
The post Big Expectations From Jaitley’s Interim Budget appeared first on Newspack by India Press Agency.
