10 years back, a guy named Palaniappan Chidambaram rose to present a budget. People hailed it as a Dream Budget. Now the same guy presented another budget. Forget dreams, this is a budget that is disappointing, unimaginative and a seriously sad budget. Everything was in place for the Finance Minister to present another dream, this time though he chose to presnt a nightmare for you. So lets take a look at what makes the nightmare budget (Budget 2007) so nightmarish.
Being an election year, the finance mister chose to provide sops. Dispensing swiftly with the usual figures, the minister dwelt at length on two social sectors that have high priority in the Congressâ€™ promise of good governance â€“ education and agriculture. Of course, the finance minister did not forget to bring more services under service tax, bring IT companies under MAT, and of course increase the cess.
- A booming economy and resultant buoyancy in tax revenues helped our minister meet the targets. Instead of trying to help the aam aadmi by reducing the taxes, the minister chose to increase the government expenses (mostly unproductive) by Rs 100,000 crore.
- Education came first with a whopping 34.5 per cent enhancement. Now that sure is a welcome step, if you decide to overlook the fact that most of this will go into providing the reservations and very little will actually help the education of the general quota (or the normal people)
- Next came the farm sector. A proposal for Rs 2,25,000 crore for farm credit and a target to bring 5 million more farmers under farm credit. Also a promise of 100 per cent subsidy to small farmers and 50 per cent subsidy to other farmers. Dear minister, when will you realize the fact that you are putting all that money into a black hole. Agriculture in India, in its present form is unviable. Farming on tiny individual plots is never a good idea (much less an efficient way of agriculture). The minister ought to have encouraged farm consolidation, but nothing of the sort happened.
- Rural India dominated with hiked outlays under the Rajiv Gandhi Drinking Mission, the Bharat Nirmal Housing Programme, the National Rural Health Mission. Now our dear minister seems to have forgotten that people live in urban areas too. While the cost of health services in the urban areas has been rising, our minister chose to ignore the fact. With the infrastructure crumling in our urban areas (take Bangalore for example), attention to urban infrastructure would not have hurt. While its good that our minister has tried to help the rural area, the complete lack of focus on urban areas is disappointing and unfortunate.
- The budget proposes to include any specified security or sweat equity shares allotted by a company to its existing or former employees within the ambit of fringe benefits for the purposes of tax. So with the ESOP now under FBT, employees stand to lose.
- India’s export-oriented enterprises such as in the thriving software outsourcing industry were brought back under the tax net. Now they have to pay 11.33 percent of the adjusted book profits as minimum alternative tax (MAT).
Dear Mr. Chidambaram. Some questions that came to my mind while listening to the boring and unimaginative budget of yours (the one that you say will help the aam aadmi, but I disagree)
- Was this not a good opportunity to bring down the excise, custom, income and all other taxes? The why did they not happen?
- What the hell is this FBT thing? Yeah, I know it was introduced in last budget becasuse someone went brain dead but continued writing the budget. Don’t you think this thing should have been scrapped?
- And hey, all this cess and surcharge needs to be done away with as well. You collect taxes for doing things that the government is supposed to do – things like building roads, providing basic education etc. Why the hell do you have a road cess (on petrol) and an education cess (on all taxes)
- While I appreciate the focus on rural development, the fact is that people live in urban areas too, and they too need infrastructure. Btw, do you think the urban middle class is just about a hundred people or so (the complete disregard in your budget makes me think that someone told you that)
- While IT too should be taxed like any other industry, don’t you think its too early? Also did you know that 11.33% might make a difference of just about 1.5% to Infosys’ profitability but can push a lot of small companies (already with razor thin margins) into loss making units?
- You talked about the aam aadmi, how does increasing the service tax net (to include new services) help the aam aadmi? As far as I can see this is going to only pust up the costs and that (IMO) does not help the common man
Maybe it was the expectation of another dream from the man who presented a dream budget once, or maybe it was the expectation that the finance minister will help the aam aadmi to grow at the rate of GDP, or maybe it was a combination. At the end of the day, the minister has presented another dull, boring budget that does not help the common man, and pushes his rate of development further into the negative. Has the dream merchant has stopped daring to dream?