Suggestions for the Budget 2023-24
The budget is round the corner and the expectations and policies to aim for a $ 5 trillion economy have been the subject of discussions , debates among the public, academicians, and policy makers both at national and international levels. The budget 2023-24 assumes significance as the foundation for the Country’ s economic growth aimed at in the midst of geo political disturbances, lots of uncertainties caused by the domestic economic conditions with high inflation, fluctuating exchange rates , depleting foreign exchange reserves, not so encouraging current account and fiscal deficits ,domestic interest rates moving northwards and continuing covid 19 pandemic consequences and uncertainties in the area of oil prices , social disparities and mind boggling technological advancements found all around creating a sense of fear along with tremendous hope to perform better and deliver improved economic results. The FM's task is no doubt very tough, particularly this year's budget being the last before the next general election. All said, there are plenty of avenues to go for a soft budget with stress on innovative approach to augment resources having no adverse impact on inflation and enhancing effectiveness on Governance standards ensuring optimum use of all assets including human resources at the command of all PSUs and Banks , preventing leakages of envisaged revenues through corrupt practices and bringing in cultural change in the mindset of people all around to find pleasure and happiness in the development of the economy to enjoy a fulfilling life. Like the GST which is very well spread over the entire population, the Direct Tax if not eliminated altogether should at least cover 10% of the population justifying the efforts and expenditure to collect the taxes.
The need for some policy measures to augment resources without any adverse consequences on inflation, exchange rates, economic growth , employment is paramount and from this angle some random thoughts for possible consideration can be more inter-alia in the area of Direct taxes as spelt below.
Rationalisation of the Security Transaction Tax ( which is absolutely non inflationary in character) in such a way that it prompts to avoid speculative tendencies among investors and at the same time encourages foreign institutional investments, can perhaps be a possible approach .There can be different types of Security Transaction Tax for Individuals and Institutions and with in these groups there can be dynamic rates for purchases and sales under different ranges of cut off amounts to optimise revenues and minimise speculations. The need to raise public participation in the capital market is a prerequisite to contain undue volatility seen of late in the market and this needs to be factored into while rationalising and incentivising the STTs. By and large retail investors objective of investment in equity market is for periodical flow of cash by way of dividends , build up of a little wealth to depend upon in their old age in the absence of adequate social security and also to be part of the economic development through shareholding in dependable and well run corporates.
The need for review of exemption of agricultural income from tax and taxation of allied activities of agriculture is overdue. Many economic activities take shelter under agriculture and allied activities to avoid taxes of various kinds. Generation of inequality of wealth and income, black money, and distortions in the build up of data emanating from agriculture and all allied activities and non agricultural activities need special attention and scrutiny to fix tax evasion particularly by those having close association with political parties, influential contacts and the wherewithal to smartly avoid taxes mixing agricultural income with other incomes possibly coming under tax net. While pure agriculture activities carried by small and marginal farmers deserve a very sympathetic approach and tax exemption, evasion of payment of taxes by rich farmers even with corporate backing, having several sources of income and varieties of activities cannot be allowed to take shelter under Agriculture to enjoy tax benefits. The issue may be politically sensitive but time has come to sensitise the rich farmers and all others and impress upon the people on the need to enhance the status of agriculture and bring it on par with other industries and do justice to all categories of income earners , tax payers from the point of view of fair distribution of wealth and levy of taxes. Participation of the majority of the population in national development through tax payment is also a necessity to take the country forward.
Mushroom growth of farmland clubs in and around major metropolitan and urban centres has been a trend these days enabling wealth creation without getting detected perhaps and adding values to GDP possibly. It seems to be a grey area and real estate transactions involving farm lands abets corruption , black money and facilitates evasion of taxes . All real estate deals deserve a special watch and deal using technology , aadhar card, making supervision and documentation fool proof from corruption of any kind and evasion of tax. A proper tie up of banks, Registrar of properties, purchasers and sellers with the aid of technology and legal experts can do wonders to help the economy free from many of the ills. The ease of doing business in real estate deals for individuals particularly in respect of ancestral properties involving legal heirs is practically absent. Corruption is unfortunately legalised and institutionalised and despite these, people suffer and they remain totally dissatisfied. This is definitely avoidable by some intelligent and technology linked solution.
While digitalisation has picked up very well and payment and settlement systems have made rapid progress among the people, the simultaneous increase observed in currency circulation is definitely a cause for worry from the point of view of containing inflation, eradicating corruption, generation of black money, financing of terrorism and evasion of taxes. Budget season is perhaps the most appropriate time for the Government and RBI to track the increase in currency circulation and arrive at the segments of the population showing interest in currency transactions in preference to digital transactions and to assess as to how they possess currency, why they hold currency,, how and where exactly the currency possession increases especially when digitalisation of currency transactions is made easy, convenient, , safe and traceable. Poor segment of the population seems to have switched over to digitalised payments and are found to be comfortable and happy without physical currency is an achievement to be really proud of for both the Government and RBI.
Though the performance of Public sector banks and some of the public Sector units engaged in different kinds of manufacturing and other varieties of economic activities, is claimed to have considerably improved, but to what extent the non performing assets and non performing human resources remain unnoticed or escape scrutiny from the Regulators if any ,needs to be seriously reviewed and remedial steps taken to enhance their performance, contribution to the GDP and involvement in making the living comfortable and dependable for the masses. A small example from my personal experience in this context is not out of context. The Gas Authority of India Ltd has installed pipelines and meters to provide piped gas connection to thousands of houses a few years back investing huge resources including man power, but the connection has not been provided so far for reasons best known to GAIL only .How many of such undertakings keep wasting its resources without any return to themselves, to the exchequer , to the economy and the needy public is a serious matter to be looked into and converted into performing assets for the benefit of all stakeholders.
Overall improvements in Governance Standards by insisting for feedback and suggestions from public in general and professionals from all walks of life in particular can definitely go a long way in preventing / minimising corruption and changing the very complexion of the economy with improved all round performance in registering good growth, enhanced tax compliance without force and changing the very culture to have ethics, and transparency in carrying out the duties and responsibilities of each and every citizen interested in the welfare of the society and development of the nation. The National Budget is one of the best possible instruments to lead and motivate the people to culturally change and realise all the dreams of a true Welfare nation.
T.V.Gopalakrishnan
Senior Citizen
(Views are personal)
