Budget 2015-16
“Indian economy is suffering from policy paralysis
and lack of optimism. I am confident that with right kind of decisions, we can
once again generate hope and confidence and turnaround our economy.”
Prime
Minister Narendra Modi
Budget 2015 -16 should Make the Taxation Policy
attractive, fully compliant by a vast majority of people having taxable income with an eye on revenue and more people oriented.
It should also make Ache din within the reach of the Government through Budget 2015-16..
Modi Government’s full scale
budget is expected to be presented in February by Mr Jaitley the Finance
Minister. Lot of expectations are there from all
segments of the society without exception. Both the common Man and the elite
group have their own aspirations and hopes from the Budget. FM’s job is a real
challenge as the whole world will be watching him and hearing him with
inquisitiveness to know what is in store for the emerging economy to offer and
make itself a vibrant economy in the midst of not so impressive outlook for the
advanced economies particularly the European economy.
The hype created all around the
world about the real capabilities of the economy a reality under Modi’s
leadership will be put to test and evaluated based on the ensuing budget which
has to necessarily build the foundation for making the economy physically
financially, socially, ethically and psychologically strong by encashing the
political stability the Government has at present. The physical social and
financial infrastructure of the country have been very weak and have eroded the
much needed confidence to attract sustainable investments is a fact which needs
to be thoroughly addressed through this crucial budget.
The country’s GDP
growth has been stagnant for the past few years straining thereby the fiscal deficit, current account deficit,
inflation, employment, infrastructure growth and resulting in the loss of confidence on the whole
Governance System. To bring back the confidence and health of the economy which
continues to be a daunting task in spite of
best of efforts being attempted by the new Government since its
inception in May 2014 the budget has to
be used as a golden opportunity and an
important tool to put back the economy on a very strong growth track.
The balancing of budget with an
eye on possible surplus of income over the expenditures is always the approach
but it is always missed is the ground reality. The reasons are not far to
seek. The subsidy on account of food, fuel
and fertilizers is the major culprit in keeping the budget astray. While the
food subsidy is essential and inevitable to take care of the poorest of the
poor, the wastage of funds in the name of food subsidy needs to be plugged with
improved data collection on the really subsidy deserving poor people,
elimination of better off people and fraudulent manipulation of data of poor
through various means, Herein comes the effective Governance, utilization of
Aadhar cards and Jan Dhan Yojana for
direct transfer of funds to
beneficiaries account with active involvement of state level agencies and
banks. Social audit with the help of prominent social workers can be used as a
tool to prevent misuse and abuse of subsidies. Information Technology can be
put into optimum use. Fuel subsidies is already on the way out with gradual
deregulation of oil prices and steep
fall observed in the international prices of oil but here again a lot remains
to be done to administratively plug the loopholes in the wastage of oil, fixing
of prices of petrol, diesel, adulteration of oil and LPG distribution. The
subsidized gas again is an area the government can have a review to take out
really better off people from the subsidy but making the gas prices practically
affordable. Irregularities in the distribution of LPG at retail level and
corrupt practices need close monitoring and remedial action to save loss of
revenue and wastage of gas. Effective administration can play the trick. Once
the people have the confidence that the government is sincere in its approach and
the way the politicians, bureaucrats, industrialists and businessmen conduct
themselves in the society, many will opt out of the gas subsidy is not an
exaggeration.
If the Banking system is made
strong and run on professional lines, the loss of revenue to the Government
through non accrual of income from the real sector growth, leakage of revenue
to the government through umpteen ways of malpractices resorted to involving
banks etc can be plugged easily. Window dressing of balance sheets of banks,
window dressing of companies’ balance sheets, and various commercial
establishments’ accounts if stopped effectively through proper disciplining of
accounting and auditing firms i.e. the brain behind all these accounts, banks’ boards, fixation of accountability for
lapses on the part of regulators of various establishments can go a long way in
fixing the problems of non performing of banks, their loans and their non
contribution to GDP growth and consequential
revenue losses. The major problem that the banks face is the asset liability
mismatch in the absence of adequate
availability of infrastructure financing in the economy for want of development
financial institutions, corporate bond markets to enable to raise long term
funds and liquidation of these funds at proper intervals, failure of the take
off of the take out finance as envisaged
and lack of professional discipline expected of the borrowers in conducting the
loan accounts of banks with an understanding that the borrowed funds belong to
depositors and the banks are acting only as trustees. The mindset of banks,
government and the borrowers has to necessarily change and the approach should
be to ensure that banks health is essential to ensure the health of the real
economy and vice versa.
With the introduction of GST, the
rationalization of many an indirect taxes presently in vogue is expected to
improve considerably and augment the resources substantially of both the State
Governments and the Central Government. Once the GST gets stabilized, the Government
can definitely concentrate on Direct taxes and see that more people are brought
under its fold with incentives of lower rates of tax, simplified returns and
without any scope to evade or avoid tax through inbuilt mechanism in the flow
of transaction trails with Permanent Account Number, tax remittance, movement
and accumulation of wealth etc. The major sources of black money are through
real estate deals, transactions in commodities like gold, silver and other
items of value, imports, exports, foreign travels and remittances of funds both
inwards and outwards under different names and purposes. This can be easily
fixed if there is a will. This budget can lay the foundation for a very strong
tax administration to capture and prevent formation of black money. its’
sources of generation and its movements in and out of the country through
improved data flow, usage of Information Technology and effective regulation
through proper tie up of information with tax scrutiny, education, reward and
punishment. Ache Din is within the reach of the Government and its policies on
taxation and Governance will pave the way to that destination.
T.V.Gopalakrishnan
