A let-down for common man

The common man has been expecting some relief from inflation/rising prices. The proposals in Budget 2011 have apparently disappointed him.

Inflation, black money and corruption are making it increasingly difficult for him to have a normal life. The budget does not answer these issues in any significant manner.

Mere tokenism

In the matter of direct taxes, Rs 20,000-increase in exemption limit in case of general category taxpayers and Rs 10,000 in the case of senior citizens do not give relief to vast majority of the population. Just 2.5-3 per cent of the population is in tax net while 30- 35 per cent is below the poverty line. Nearly 65-70 per cent ise engaged in agriculture which is not subject to tax. The raising of exemption limit to Rs 5 lakh for very senior citizens (80 years and above) is mere tokenism as the number is expected to be not big. Reduction of surcharge on companies from 7.5 per cent to 5 per cent does not give any direction and is prima facie arbitrary and the loss of revenue is without any purpose. The same is the position in regard to raising the tax rate by 0.5 per cent for MAT. Relief could have been given to lower middle and middle class taxpayers by restoring standard deduction for salaried persons and increasing the Section 80C limit.

In the matter of Central excise, the rate of 10 per cent could have been reduced on items of mass consumption to give relief to person with low incomes. This has not been done. On the contrary, an increase in excise duty by 1 per cent without Cenvat facility has been proposed on about 130 items such as processed foodstuff, textile goods, drugs, medical equipment etc. used by the masses. Excise duty would be reduced on serially numbered gold bars and jewellery and mobiles are also to be cheaper. Exemption from excise duty has been proposed for air-conditioning equipment, refrigeration panel etc.

To cause hardship

Some proposals concerning service tax are anti-common man. Levy of service-tax on all services including diagnostic services provided by a centrally air-conditioned (wholly or partly) clinical establishment having more than 25 beds for inpatient treatment is likely to cause hardship. Exemption of Government hospitals from this levy will not provide the requisite relief as they are far too inadequate to meet the needs of a rising population.

Similarly, there is merely a reference to black money. This problem being paramount, concerted attention on the same was needed. Although the estimates of Indian black money stashed in secret accounts vary widely, a recent Global Financial Integrity Report puts that figure at over $450 billion . According to another estimate, India has reportedly more black money than rest of the world combined.

India tops the list with almost $1500 billion in Swiss banks, followed by Russia $470 billion, UK $390 billion, Ukraine $100 billion and China with $96 billion. According to the Government of India, it has no reliable estimate of black money, which could be between $500 billion and $1,400 billion. Hence this issue needed to be tackled effectively.

A strong approach for urgent solutions is missing in the proposals. Similarly, there are no measures for checking corruption which has spread like cancer.

(The author is a former chairman of CBDT.)

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