Dr. Sanjiv Agarwal
The Union Budget 2013-14 presented by Finance Minister, P. Chidambaram, his 8th one, could be termed as a balanced, focused and a reasonable one from the point of view of economy and all the stakeholders. Though it may be missing the much needed ignition or spark to put the markets on fire, it certainly issues the concerns of fiscal discipline, consolidation, inflation, other macroeconomic measures and also trying to keep the basic tax structure unchanged. Without affecting one and all on tax front, he has been able to enhance the plan allocation in major areas and take up many socio economic schemes, besides pressing the trigger for industrial growth and investment.
The additional tax revenue would yield merely 18,000 crores which only indicates that there is only a modest hike in tax revenue, that too from an affluent class and people who can afford to pay additional tax, just for one year. While higher taxes on about 43,000 rich people, surcharge on profit earning corporates and commodity transaction tax on non-agriculture transactions will not hit all and sundry but only a select few, the benefit in form of reduced securities allowance of 15 percent, additional benefit to housing loan borrowers and income tax credit in initial slab of Rs. 2 to 5 lakh are to be welcomed which will benefit many people (1.8 crore) across the board.
The proposals are bound to increase investment – both domestic and foreign and enhance manufacturing activity and productivity. In turn, economy will get a boost, many sectors will grow and infra structure will get developed. For example, with just one concession in interest on housing loans, entire real estate sector, construction sector, Cement, Steel, Works Contracts sector, Financial services etc. will get a boost. Investment allowance will also push up investments in industrial sector.
On Indirect taxes side, while there is no change in peak rates of customs, excise and service tax, the hike in rates of few items like SUVs, imported vehicles, cigarettes etc. cannot be criticized. One needs to appreciate the fact that the budget could have been bad in terms of new imposts, but it has not been done.
Not much of tinkering has been close in Service Tax structure but given the level of non-compliance in Service Tax (out of 17 lakh registered assessees, only 7 lakh file returns), a scheme has been announced as an amnesty scheme whereby defaulting assessees can file Service Tax returns for five year period since October, 2007 and pay taxes so as to save on interest and penalties. This would certainly help push compliance as well as add to tax kitty and reduce possible litigation and save on time.
On Goods and Service Tax, though the FM has showed his serious concern, once again he missed out on the clear road map. We can only hope for GST in near future. How near, no one knows.
On the fillip side, the budget could have been used as an opportunity to announce some mega schemes for boosting infrastructure, investments, FDI in certain sectors and major financial sector and capital market reforms. All in all, budget is a reasonable step ahead, though it could have been worse. The reforms and steps initiated are macro, deep and shall have long term positive impact. For people who are looking at a quick buck making after budget from markets, it may fail to enthuse.