BY INVITATION. Contempt for the common man

The Budget fails to address the structural issues that impede the growth of the Indian economy. It is long on rhetoric and short on substance. By getting into details of intent, the finance minister has sought to confuse rather than impart clarity.

The foremost substantive issue is that he has decided to junk the Direct Taxes Code, a legislation that would have ushered in a new income tax code and on which substantive work had been done for some time.

This was one step that would have radically rationalised the Income Tax Act which is riddled with exemptions and notifications that make it extremely difficult for a layperson to understand it. Every provision has some exemption or notification attached to it which takes away from the intent of the enactment. The finance minister has junked a significant macroeconomic reform for no logical reason.

Even on the Goods and Services Tax, what we have heard is vague indications that it will be rolled out next year. No clarity has been imparted on how and why the BJP changed tack with regard to a mega reform step like the GST, which they vehemently opposed for a decade, even linking it to extraneous issues such as criminal charges against a political leader.

The finance minister now wishes to make clarifications even on the retrospective taxation issue. It is a mystery as to how the BJP now hopes to convince the country of the government’s intent with regard to rolling out reforms on which the finance minister, in his earlier avatar as leader of the Opposition in the Rajya Sabha, had accused us of “tax terrorism”.

I would like to underline that there has been no unequivocal statement from Mr Jaitley on the retrospective taxation issue. The vague references he has made today conceal more than they reveal.

Even on the question of the General Anti-Avoidance Rule (GAAR), one would like to ask the finance minister what he has done except putting it in abeyance? The sword of Damocles still hangs?

Let us now come to the swan song in the Budget — the black money issue. The finance minister has talked about a proposed legislation to be brought into Parliament at some indeterminate time in the future. Aside from the fact that it had no space in the Budget, the proposed legislation offers a curious insight into the future. It is axiomatic that the proposed legislation makes a distinction between black money abroad and the monies stashed away illegally in India.

Given the size of the parallel economy in India, one wonders why the finance minister would make this disingenuous distinction. It defies logic.

Even more serious is the move away from fiscal consolidation. The finance minister has fixed fiscal deficit for 2015-16 at 3.9 per cent and 3.5 per cent for 2016-17.

This is decidedly deviating from the path set down by the United Progressive Alliance (UPA) based on the Kelkar Committee recommendations. The finance minister’s deviation does not augur well for the economy.

There is, as was expected, a quid pro quo with the corporates for backing the BJP in the general elections. I shouldn’t like to spoil anyone’s party but it is difficult not to see what the finance minister has done. He is giving with one hand and taking away with the other. The reduction in corporate tax is accompanied by a phased reduction of the exemptions. The government’s corporate cheerleaders should read the fine print before they start celebrating.

It is ironic that after beating the UPA on financial inclusion and Aadhaar for so long, these initiatives form the centrepiece of the BJP’s flagship economic reforms.

The ‘JAM Trinity’ as it were of Jan Dhan Yojna, Aadhaar and tele-density are the cornerstone of this government’s reforms. If the finance minister is claiming intellectual honesty, why not accept that all these initiatives are the product of the UPA government’s imaginative thinking and reforms for which were constantly attacked by the present government?

More than anything else, what this Budget also shows is the present government’s utter contempt for the middle class and the poor. What is the one initiative that puts the money back into the common man’s pocket?

Except for concessions that are linked to investments into various fund companies, even the pro forma benefits in terms of tax slabs are not forthcoming. At the same time, the wealth tax has been abolished in favour of a two per cent cess that is expected to be levied on the rich. Any good tax lawyer can find a way around this provision.

The Indian middle class should reflect on whether this government is at all interested in the welfare of the masses or it functions solely for the benefit of the super rich.

For a government that thrives on rhetoric and chest-thumping, the outlays for defence account only for inflation rather than any substantive allocation. The finance minister also waxed eloquent on the consumer price index going down from 11.4 per cent in 2012 to 5.1 per cent now. The trend is welcome but we have to also wonder whether this is a sign of deflation, of shrinking in the economy. Public investment in infrastructure is cited to be ₹70,000 crore but we are yet to hear about where it is going to come from.

Except for carrying forward the imaginative reforms envisaged by the UPA and finding ways to help their benefactors, the government has very little to offer to the common man, the farmer and the women. (As told to Poornima Joshi)

The writer was Minister, Information and Broadcasting in the UPA government

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