Nirmala Sitharaman , the first time full pledged Women Finance Minister made her mark in maiden presentation of Budget. She deviated from regular practice of presenting accounts of Income and Expenditure. She left it to annexures and presented her approach, policy, thinking process of how she wanted to run the affairs in the coming year. Many stalwarts get disappointed for not finding place their information in her speech. In one way, we can say that it is a 21st century presentation.
As outlined by Economic Survey, her Budget stressed on growth, creation of congenial atmosphere for investments, encouragement to Startups, NBFCs, strengthened Infra, facilitates credit growth, focused more on next gen products. It also tried to incentivise high tech processors, relaxed FDI norms , liberalised stipulations like local sourcing conditions .
Major stress is given in tightening tax norms plugging loopholes in the system and made the Super Rich to pay back to the Country. At the same time, provided concessions in Corporate tax. She wanted that Industry must be competitive and profits must be equitable. Middle class wanted more relief in Tax tariffs but she acted on expected lines.
On reform front, she did not touch much except initiating labour reforms that too partially. She mobilised additional resources from Super Rich as well as common man. There is reason for it. To maintain fiscal deficit in control, she wanted more resources. There was a talk that she will go for estate tax but not chosen because of complexities. She chose simple, implementable without extra manpower and significant amount. The fuel taxation filled in that criteria. On one estimation, it may be around Rs.30,000 crores per year and for this part of year, it may fetch around Rs.22,000 crores. Such a big amount without engaging any extra human resources might be tempted her to choose this tool. At the same time, inflation is also under control and this taxation may not cross permissible limits. Similarly, imposing extra tax on Super Rich serves two purposes. one is known ,that is additional resources. Second is hidden. By charging Super Rich more, common man and middle class got answer why they did not get any relief. She acted intelligently by this measure.Now, it is very difficult to avoid tax. Any individual who is not coming under tax bracket requires to file IT return if
a) Deposits in Current Account/ SB Account are more than Rs.1 crore,
b) Expenses on foreign tour exceeds Rs.2 lakhs
c) Expenses on Electricity exceeds Rs.1 lakh and
d) Investments from long term capital gains are not in specified categories etc
Not only that there are restrictions on cash withdrawal for more than 1 crore from account. If they want to draw, they have to pay penalty of 2% which is heavy amount. In 2017-18, it was reported that 1,75 lakh entities drew cash from Accounts. Out of that, 1 lakh are PAN holders. 500 entities drew more than 100 crores from the account. This stipulation serves two purposes. One is restricting cash transactions. Secondly, routing through other formal channels. Also, it was made compulsorily to provide digital tools by the business entities whose turn over is more than 50 crores. Another measure is whoever pay more than 50 lakhs to any contractual work or professionals, 5% TDS is to be deducted. It mainly effects construction activity. All these measures made to make the tax compliance strictly. It shows the sincere intentions of the Government to curb black money.
Another important measure is with regard to manufacturing industry. The exemption of customs duty on high tech processors like lithium ion cells, batteries, solar charging equipment, solar photo voltaic cells, other processors in Computers, Laptops and other advanced electronic goods is very good move to make these high tech manufacturing units competitive globally. New units may come and invest in India. Like wise, relaxation of FDI norms in Aviation, Media, Insurance intermediaries and local sourcing norms is a welcome measure. These measures will definitely encourage global investments into the country.
Coming to the financial sector, the capital infusion of Rs.70,000 into PSBs will facilitate speedy credit growth. Like wise, incentives given to NBFCs is the need of hour. However, the governance issues as well as other structural issues in Banking Sector were not touched. The reasons are not known.Sectoral allocation of funds are on northern direction for many sectors including agriculture, Rural roads, Affordable Housing, women and Child welfare, Education ,health, railways. The two flagship programmes Swatch Bharat of last term and Water Resources Management of this term were given much focus. The inclusion of solid waste management in rural areas under Swatch Bharat is a very good initiative in continuation of construction of toilets. Similarly, 'Har Ghal Jal' Water to all Houses and preservation of water resources is a good initiative. However, no attention is paid to structural reforms in agriculture which is prime concern and urgently to be attended. This silence is disappointing. Overall, Budget is good but not the Best. Congratulations to Nirmala Sitaraman, daughter-in-law of AP for presenting a futuristic Budget.