I am a bit late this. However, I thought I should not miss writing it. While most of the people would have done some internet searching to know how the Union Budget for the coming year is going to affect them. So, I will restrict my views to the points I highlighted on my previous entry that was posted on the night before the “Union Budget”. I had covered some broad themes that the Budget should look at from the long-term perspective. Let us know evaluate what the government has announced on those aspects.
GST: As I mentioned, government couldn’t have announced implementation of this immediately as the state governments weren’t taken on board. However, the government has clearly announced its plan to start implementation from the next year (2016-17) onwards, which I believe is the right thing. This will help rationalize the country’s tax structure and bring in more predictability to any investor. It will also ensure that there is greater accuracy in tax collection. However, as the devil resides in the details, knowing the implementation details would help us understand exact level of benefits that we can expect from this. The first problem is the entire structure is similar to the existing. Proposed way of implementing is not going to get us all to a uniform tax regime anytime soon. GST is divided into multiple forms (CGST, SGST and IGST) clearly make it similar to multiple taxation structure prevalent today, VAT, CST and Central/ Service Tax structure. What is new? Nothing!
GAAR: As I said, the government has been acting weak on this. It continues to be so and defers it again. While it isn’t wrong to defer it. But this time, they should backtrack or defer again. I hope that they will not in the next budget. We can only wait and watch.
Black Money: There are many steps proposed on reducing the Black Money problem. There are many penalties and disincentives for those who do not disclose their black money and who have undisclosed foreign assets. This is definitely as way forward. Implementation is what we want to see, as there were already penalties/ punishments for possessing black money!
Subsidies: It is good that there is no significant increase in the subsidy amounts this year’s announcement. However, there have been no steps announced to bring in rationality to the current subsidy structure. That is a disappointment!
Improve Savings: Announcement of special tax saving pension related savings (80CCD for INR 50,000 per month) is a good step towards inculcating a retirement planning approach to individual savings.
Capital Investment and Infrastructure: There is something to cheer on this front by committing huge investments in road, port and energy. Tax-free bonds to fund the infrastructure are coming back. This will also improve the nation’s savings rate.
Export encouragement: Not enough has been provided for the benefit of exporters. Very minimal additional support at this juncture is not encouraging, especially when we are having a gradually increasing import bill. As we can’t reduce dependence on the crude, focus should be on improving exports and reducing import of unnecessary goods (especially those that can be manufactured here). However, there isn’t much to cheer on this front in this budget.
Reduce import dependence: Import restrictions on Gold would partially reduce the import bill. However, the key problem of crude is yet to be resolved. Crude is at the lowest price so it would help us. However, it will not continue at this level forever!
Food and Agri Businesses: Good sums have been allocated towards improving Agriculture infrastructure (25,000 crs for rural infrastructure development fund). But key issues are availability of power, development of cold chain infrastructure. Whether these investments and investments in infrastructure translate into improvement in power and agri supply chain is to be seen.
Summarily it wasn’t a bad budget but at the same time it isn’t a very good one either! Obviously the budget couldn’t fulfil all the expectation. But there is only limited that any government can do. I think within that realm of thought, it looks that the government (Mr. Arun Jaitley) hasn’t disappointed many.
No comments:
Post a Comment