Nantoo Banerjee
This is undoubtedly a different budget, much different than anyone has seen or read since the independence. The poor, the downtrodden and the old may think they have the most – insurance, pension, health care and all that. The unemployed youth, aspiring small entrepreneurs may find the budget providing a basket of hopes. The salaried middle class carries more money into their pocket even without lower tax levies. The states are treated most ravishingly ever. Eastern states, including West Bengal and Bihar, and newly created Andhra Pradesh have more. The give-away list goes on and on. There is little to grumble about the budget. The only fears are the remote possibility of an international oil price surge beyond $75 per barrel and a real drought.
As if to silence the critics of the Narendra Modi Government on its instant disability to bring back the huge black money deposited abroad, the budget, for the first time, comes heavy on black money hoarders by undertaking to enact a law that seeks to impose 300 per cent penalty, 10 years of rigorous imprisonment, making it non-compoundable, with no permission to approach the settlement commission. Non-filing of return or filing with inadequate disclosures, including assets held abroad, will carry rigorous imprisonment up to seven years. A benami transaction (prohibition) bill to curb domestic black money will be introduced in the current session of Parliament itself.
The opposition, who were personally greeted and casually spoken to for the first time by Finance Minister Arun Jaitley at the right hand corner enclosure minutes before he started his budget speech, were almost spellbound after the minister started pouring one benefit after another to the common man and the middle class. Only the rich, having individual income of over Rs.1 crore, are made to pay an additional surcharge of two per cent on the income beyond the amount, although this comes as a replacement of wealth tax. In fact, a section of the super rich had asked for it though the salaried rich may have reasons to grumble. But, the super rich living on tax-free dividend income may not have much to grumble about it. Business persons, across industry, generally welcomed the budget although the market did not act positively since the budget did not have anything directly special for foreign investors immediately, who control both the key stock indices, Sensex and Nifty. The finance minister is certain to tackle the issue later to see that the stock surge that started soon after BJP named Narendra Modi as its prime ministerial candidate well before the election last year, continues. The budget provides several hints on that account and made it very clear that the somewhat unpleasant general anti-avoidance rule (GAAR) will apply only to investments made on or after April 1, 2017.
The proposed reduction of corporate tax from 30 per cent to 25 per cent over a four-year period is certainly good news for industry. Some additional import tax and levies may have upset some industries leading to selling pressure around fast moving consumer goods, consumer durables, capital goods, metal and power, etc. They appear to be of temporary consequence. Banks, oil and gas and IT indices were up. The budget, almost all agree, carries a strong growth focus. This was supported by yesterday’s economic survey. India is looking for reaching a double-digit growth target within three years. From veteran frank-talker businessman Rahul Bajaj to pure professionals such as A. Durga Prasad, ICAI president, and Kamalesh Rao, Kotak Securities president, have particularly hailed the sense of optimism truly reflected in the economic survey and budget announcements.
However, what is rather somewhat puzzling is the government’s interest in gold, the import of which is surging despite best ever RBI’s foreign currency deposits and lower oil import bill. The gold import is booming within months of the new government taking over. India, though a poor country and runs a big negative balance of trade, has once again emerged as a top gold importer, second only to oil import. The budget carries as many as three proposals on gold – a monetization scheme allowing benefit to both gold depositors and jewelers under the facility, sovereign gold bond and, finally, developing an Indian gold coin. It seems the government is as much obsessed with gold, which is almost entirely imported, as the country’s population. The fear is that the rich and the middle class will be happier to invest in imported gold, a common source of black money hoarding in the country along with investment in real estates.
Finally, the budget is certainly pro-growth, especially after the government, lucky with fallen oil import bills that kept the overall price inflation (WPI) low, has restored the micro-economic stability and created conditions for a stronger economic progress in the next few years. The budget also provides a strong push to the hitherto neglected sectors like defence and infrastructure. The next is that the land bill must go through to benefit both the industry and holders of land, marginal or otherwise, to drive the next stage of development. (IPA)
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