There are very few occasions when a Government come up with brand new Budget and tax slabs are not modified. Bu it happened this year and it is directly noticeable that there are no tax rates cut took place in new budget. There is a small consolation change for the lowest tax bracket individual earning a total income of Rs 5 lakh or less per year as an exception. Total Plan Expenditure placed at Rs. 5,55,322 crore. It is 33.3 percent of the total expenditure while Non Plan Expenditure is estimated at Rs. 11,09,975 crore. Plan expenditures are the expenses which are covered under the five year plan. Non-plan are not covered under the five year plan for example expenditure incurred on administrative services, defence deals, salaries and pension etc.
For sure this time government came out with a different attitude, by not working on populist but an economic viable budget. So not changing the tax structure was less on grabbing the election benefit but making UPA as better manager among people. The main emphasis was on cutting down the booming fiscal deficit, which has created a plenty of problem for the government. But if one will clearly see the complete budget, picture is somewhat different as percentage increment are used a lot in budget statement to create a big illusion. Overall there was no special scheme announced, just new numbers are there with old names.
Today, maybe one in every of the biggest development issues in the region is persistently high unemployment and skills deficit—especially among youth—that is weighing down economic growth of our country. As we have huge quantity, but what is lacking is the quality. For skill development various schemes from which funding will be sourced clearly spelled out, and an additional provision of Rs. 1000 crore as an associate incentive for candidates achieving successful certification. These initiatives are certainly welcome. Rs 1000 crore specially for talent development is a sensible step, provided it’ll be enforced during a truthful manner.
As even forecasted by many experts earlier, Finance Minister came up with proposal of taxing super rich. In one form it is a hardcore socialist step by the government. Tax for super rich can solve problems of fiscal deficit in a way and conjointly it will be helpful for government in generating revenue. How much it can solve the problem is again a debatable issue. As there are approximately 42800 people coming under its net in current situation. Also there are chances of effecting the economy in a negative way also. Unlike United States, tax in India is not an ethical and moral issue. Here it is more or less considered as burden. So there are high chances of individuals progressing to completely different routes for tax evasion by illegal methods or dirty ways. All that can lead to generation of more black money in the economy. Well it will be a boom in Charted Accountants business also. I think better option to solve the problem of fiscal deficit could be strict corporate tax implementation.
Budget also proposed to line up India’s first Women’s Bank as a public sector bank. With many special attributes this bank will lend mostly to women and women-run businesses, that supports women self-help groups (SHGs) and women’s livelihood. According to proposal such bank will be run by women solely. I am bit sceptical regarding this arrangement as already there is a shortage of workforce in country specifically in Banking Sector. The Reserve Bank of India officially has termed 2010 to 2020 as the ‘decade of retirement’. For the success of such provision we have to wait and watch.
The Cutting of fiscal deficit up to 4.8 percent by rolling out the subsidy is a nice move by government and it is much required also. From long-standing, finance minister was troubled regarding the high quantity of gold imports. For Indian population Gold was invariably in their priority list as a decorative object but these days people are highly exploiting gold as a inflation neutral investment. Even this year the foreign reserve has not changed in abundant, In march 2012 India’s foreign reserve was at 294.4 billion dollar and this year this amount is at 295.5 billion dollar, which is also a matter of concern. For this unchanged foreign reserve, major reasons can be the current account deficit specially by gold imports and petroleum imports. We cannot compromise with Fuel Imports, as our energy demand is increasing day by day. So to scale back investment in gold, government came with Inflation Indexed Bonds or Inflation Indexed National Security Certificates to protect savings from inflation.
It was mentioned in Budget, we have to cut expenditure and subsidies. But a clear road-map for fiscal consolidation by cutting expenditure and subsidies was missing in budget 2013. Which is highly required.