On Tuesday, former Chief Economic Adviser Arvind Virmani (@dravirmani)responded to questions on the Budget from BusinessLine ’s readers on Twitter.

Conducted from the @businessline Twitter handle and moderated by Associate Editor Raghuvir Srinivasan, Virmani, when asked to describe the Budget in one word, said it was “Good.”

Is the stage set for a rate cut?

If you go by the RBI Governor’s statements on fiscal deficit and its quality, then the Budget has met these expectations.

Going by what the Governor did after last year’s Budget, one would expect a rate cut by April.

Taxing PF means double taxation. PF is deducted from a salary on which workers have already paid tax…

Quite to the contrary — currently EPF has zero taxation. The new proposal is to move to partial taxation. There will be no tax on (withdrawal of) all the savings you have accumulated in EPF till 1st April 2016.

The tax policy on EPF is applicable for defence forces as well…

EPF is a particular provident fund. Govt employees use NPS (or GPF).

Is it taxable?

NPS is fully taxable on withdrawal.

Then where is the parity?

The Budget proposes to reduce (withdrawal) tax on NPS from 100% to 60% and raise from 0% to 60% on EPF.

If you tax the corpus, tax may sometimes be more than interest earned…

Logic: That is NPS design: “Net Saving Principle” => You don’t pay any tax on income which is saved, but pay when income is consumed

Is the rural push too little, too late?

With two bad droughts in a row, there was clearly a need to focus attention on agriculture. However, rural infrastructure has received attention in last Budget also.

It is double taxation if my corpus invested in NPS from post-tax income (since PF soaks up 80c limits) is taxed again when NPS matures…

Then “net saving principle” is being violated. Same principle was applied by US in NRAs (years after we introduced NPS).

What does the middle-class get from the Budget?

The net effect of all changes in direct taxes is negative (ie, less taxation). So there is no average loss on this account.

Do you think it is possible to double farmers’ income?

Arithmetic shows income can be doubled in 7 years if nominal income grows at 10 per cent a year. This is possible.

Is direct transfer of subsidy going to be the way forward? Or do you think subsidies are on their way out?

Targeting subsidies through DBT is the only way to minimise leakages & corruption.

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