Budget 2014 should not be price pushing exercise

By Syed Ali Mujtaba,

The forthcoming budget is eagerly awaited and if cues from the new government have to be interpreted, the national budget could be an exercise in taxation and pushing up the prices. If that may be the case, the new government seems willing walking into the policy paralysis trap.

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It appears that policy paralysis may continue to dominate the Indian governance for some more time. The people who felt librated from the UPA rule is already feeling the heat that now they are bounded under the shackle of the NDA rule.

The new Prime Minister Narandra Modi has cautioned the nation that India will have to face tough measures that would be initiated by his government to ensure economic growth. He has virtually hinted that hard times are ahead for the citizens of this country. Sensing it common man is wondering as to what can be the more hard time than the present one.

Following Narandra Modi’s observation, railway fare has been hiked to whopping 14.2 per cent, unprecedented rise in recent times. Close on its heels came the announcement of the LPG hike but subsequently it was rolled back. The prices of the petro products are allowed a free rise and there is no measure in place to check its increase.

Obviously all this is going to have a cascading effect and an all round impact. These and similar steps will lead to cost push and result in spiraling of the prices. It may further ignite to the already inflationary situation in the country.

Consequently, it would lead to demand for higher wages and the counterproductive cycle would continue as it has been the case so far.

These were precisely the policies followed by the previous UPA government. Now the NDA government is toeing the same line. The question is being asked where visionary Narendra Modi is different from its predecessor when it comes to formulating policies for the governance of the country. He talked about policy paralysis of the previous government and now he too is in the same rut.

It is surprising that Narendra Modi and his team do not appear to have realized that increasing the taxes and price of services and commodities, would not provide solutions for the country’s economic and industrial stagnation. Instead of boosting the income of the government, it may rather increase miseries of the people.

So what is needed is to apply a freeze on the all sorts of tax measures and stop increase in the prices of fuel, and other commodities, in order to minimize economic woes of the people and boost their morale. Their wholesome participation in the national growth is what diligently needed.

What is really necessary for the government is to drastically cut down its wasteful government expenditures, improve efficiency and productivity in all possible ways. It should discontinue the schemes that amount to extending freebies. The government has to ruthlessly putting down corruption in the government machinery at all levels and be firm to unearth the black money and bring out the hoarded commodities.

There is parallel economy in the country today with several crores of rupees of black money in circulation. A competent government with a determined outlook and programme should certainly be able to bring out the black money that will have far reaching and positive implications on the health of the national economy. The government certainly by doing so can create the right climate for growth and investment and in turn promote steady industrial and economic progress.

This would inevitably result in increased income for the government and make it unnecessary to increase taxes hike fares further. It would also bring down the price of real estates and essential commodities, with dramatic effect on the national psyche.

The people expect from the government to get away from the beaten track of thinking that increasing government income by imposing taxes and fare increase may stabilize the economy. Moving in such direction would make Modi’s government no different from others and will leave the common men extremely disappointed and frustrated.

It is well known that overall efficiency in the country is below par and even scientific establishments and research and development laboratories are functioning with the lethargic attitude and without any accountability.

Narendra Modi should implement strong measures to bring all round efficiency in the country by recognizing the individuals and organizations functioning with merit and weeding out those in positions of power who cannot meet the national expectations and the needs.

People have appreciated Narendra Modi’s stress on providing huge opportunities to the people for skill acquisition and creating employment prospects at the small and medium scale level in a big way. The investment is needed for this task and there is enough money in the country in private hands to make such investments, which can be supplemented by investments from overseas sources as well.

Finance minister Arun Jaitley is all set to present the Union budget on July 10, 2014. There are some major expectations of the common people from the Union Budget 2014.

The first and foremost is that the government should try its best to bring down the inflation, its hitting common man very hard.

Second is the government should increase in income tax exemption limit from existing Rs. 2 lakh per annum to Rs. 3 lakh.

The medical reimbursement exemption limit should be increased from Rs. 15,000 to 1 Lakh rupees.

The government should simplify the process of securing educational loan and its rate of interest should be brought down.

The rates of the housing loan rates should be lowered. Everyone wants to own a house but the skyrocketing prices of land and flats create a hurdle for them. People want the housing loan to be lowered from 10 plus percent to 5 plus percent. They also expect the government to increase the tax exemption limit for interest payment on housing loan that at present is Rs. 1.5 lakh to Rs. 3 lakh per annum.

The upper limit of the deduction for several investments should be increased. At present, the Section 80C of the Income Tax Act allows deduction of Rs. 1 lakh for investments like provident funds, PPF, fixed deposits, mutual funds, etc. If the upper limit is revised, it will reduce the tax amount as well as increase investments.

Women security is another major concern in the country. Increasing number of rapes and molestation is reported very often. People want strong action from the government to curb such practices.

If the government is really serious about governance, it has to find ways and means to means to raise funds without taxing the people. ‘Robbing Peter to pay Paul’ approach is not a new idea.

(Syed Ali Mujtaba is a journalist based in Chennai. He can be contacted at [email protected].)