Jai Sri Ram
The budget 2024-25 Some Random Thoughts.
The ensuing budget 2024- 25 is important not only from the point of view of augmenting the much needed resources for economic growth but also equally important in the equitable distribution of the wealth, keeping inflation both domestic and imported under control, by containing the fiscal deficit and managing the dynamics of international socio- economic -political scenario and the resultant economic consequences in the prices of oil, exchange rate movements etc. No doubt the economic growth momentum witnessed in the country thanks to political stability , dynamic economic policies in the midst of the unprecedented pandemic covid19 , fluctuating weather conditions, revolutionary social and technological changes being experienced day in and day out, has given a moral boost and kickstarted the performance of institutions and individuals aiming at 7% average growth per annum for a few years more. It is indeed a pleasure to read from the Goldman Sachs report ‘Rise of Affluent India’ recently published that Affluent Indians may number 100 million in four years earning an income of over $10000 per annum. Hence, in this favourable background, I would like to present some random thoughts and suggestions to consider perhaps in the coming budget for giving a further boost to the economy.
Ensure effective Governance everywhere
Governance deficit seen in Manufacturing and Service Organisations needs to be closely monitored and wiped out by incentivising through budgetary measures. Public Sector Undertakings have to account for their commitments and fulfilment of optimum utilisation of resources avoiding delays in the execution of projects and wastages of resources. To cite an example, the Gail has installed gas pipelines years back investing huge resources in several places but the intended connections have not been given for no known reasons. The pipelines get rusted and perhaps need replacement before actual gas supply is made available. Such idle investments are nothing but a national waste of resources without any known accountability to the public and their tax money. The need to incentivise PSUs through budgetary provisons to recognise their contribution to boost the economy without wastage of resources is paramount and this itself will help to give a boost to the economy in multiple ways. Public have also apart from undergoing inconveniences, some negative assessment of the overall administrative mechanism in such uncalled for delays for unknown reasons.
Introduce Monetary Rewards and Monetary Punishments through budget Provisions
Technology has been doing wonders for the nation but at the same time technology adoption has taken away the accountability for service deficits. Banks , Insurance Companies and other service providers do not provide their phone numbers , email contacts and widely advertise the grievance mechanism unlike in the past if any available for deficiency of Service and complaints . The Complaints portals introduced need a revisit and the authorities have to ensure that the Complaints redressal has really happened by cross checking if required with the complainant . Once in a while, the authorities or the Regulators should take an opinion / survey to assess whether the Service providers are really providing the intended service and the customers are really happy. Ecstasy of Customers definitely not expected in any case though. The grievance mechanism should serve the purpose and the concerned authorities should be sensitised enough to ensure that the service providers really satisfy their customers and Customers grievances are really taken care of in the interests of the Customers and more in the Interests of the Service providers themselves. The deficiency in service not only affects the mobilisation and optimum utilization of resources but also damages the build up of image and reputation nationally and internationally when the whole world is expecting the country to outsmart the advanced and other fast emerging economies. The Grievance mechanism needs to be incentivised through budgetary process and the service providers should be rewarded or penalised for their performance based on transparent assessment. Incentivising the regulatory compliance through budget provisions can be a workable solution to satisfy the Customer service. Such an approach can definitely add to the efficiency of the Institutions reflecting on their enhanced productivity and all round progress augmenting the economic growth through improved quality, enhanced quantity and satisfied service all around bringing in positive change all around. Nothing wrong in giving a trial through budgetary provisions.
Containment of Inflation.
Monetary policy measures alone cannot contain the inflation particularly retail inflation which needs to be administratively tackled . Corruption, corrupt practices, wrong doings, black money, and cash transactions seen in and around the economy at the time of innumerable elections , land deals, offering freebies, miscellaneous services involving grant of driving licenses, issue of Aadhar cards, leave and license agreements , and services like obtention of certificates of all kinds like Birth, death , notary signatures, power of attorney, etc from Governments and Government agencies, marketing and distribution outlets , garbage collection, garbage removals from wholesale and retail market yards, etc involve lots of money and they reflect on prices of commodities and services and cost of living ultimately making the life miserable particularly for low income groups and others as well. It is time to think of introducing some solution through budgetary provision through incentives / disincentives and Artificial Intelligence to prevent wrong practices and undesirable and antisocial activities. It is an area requiring lots of education , canvassing and motivating people to enlighten them to keep away from practices having an impact on quality of life and cost of living. It is time to think of having some budgetary measures to deter people from encouraging wrong practices affecting the quality of life and environment cleanliness in all respects. This is an area requiring action from all politicians, administrators, educationists, professionals from all fields, social activists, welfare associations, Various Cultural Forums, etc .The budget can think of incentivising and disincentivizing by disciplining the politicians / bureaucrats for introduction of best practices worth emulating and educating the public administrators.
Identifying and delinking taxes from inflationary impact.
Since inflation affects the poorest of the poor very badly and treating the poor and the rich alike for tax purposes particularly the salaried and fixed income earners without going by the number of dependents to be taken care of by them seem to be unjust and unreasonable in a society where the living standards and cost of living, and income levels and wealth creations differ vastly and no comparison whatsoever. A Person earning 2.5 Lakhs and less with many dependents to be taken care of and a person earning in multiple lakhs and crores with or without dependents to be taken care of are treated prima facie equally except for different rates for different slabs of income. Exemptions by way of Savings and Insurance are at a very high cost for the lowest slab having dependents. There is absolutely no comparison whatsoever on the quality of Living between the Poor and The Rich although the poor struggle to make both ends meet. This needs to be reviewed and corrected to provide a level playing field for all kinds of income earners and wealth creators.
Like Security Transaction Tax which is non inflationary in Character, there are several taxes which are non inflationary to be identified and considered for levy from different classes of people who can definitely afford such levies and are unaffected for their living standards by any reckoning. For Instance the professionals like Doctors , Advocates, Chartered Accountants, Film Stars , Brokers, Real Estate Dealers, Middlemen engaged in all sorts of Services earning above a cut off limit needs to be brought under a special category of income earners and not to be mixed with salaried class. Inequality in income levels and wealth Accumulation capacity need to be well factored into arriving at the tax rates notwithstanding the fact that the inflation kills the poor and at the same time protects the rich. It involves a tough exercise but such an exercise is inevitable in a society where the majority struggle to survive and a few enjoy the best of luxuries. Broader shoulders should carry heavier weights is one of the canons of taxation and this needs to be convincingly implemented and adhered to benefiting the society, the economy, the rich and the poor justifiably.
Assets and Liabilities Of Affluent People
It is high time to make a revisit to Income Tax returns and there should be enough data on the Assets and Liabilities of Individuals and families. The linkage of Aadhar Card and Pan Card would be an ideal objective in the long run to fix many of the problems in the, Country. The tax returns should be simplified and they should attract people to volunteer and submit the returns. For instance fixed income earners like salaried class and only interest income earning less than say Rs 10 lakhs should have only a single page return and those having earnings from multiple sources can have returns running into a maximum of two or three pages. Professionals , business class people and those having income from real estate , capital markets , and other sources can have detailed returns and can be certified or non certified depending on the levels of income. Those who earn above Rs 25 lakhs should submit only certified returns . Of course an expert committee can decide the type of returns. However , in general, the approach should be that All are honest and very loyal taxpayers unless and until proved to be otherwise.
Time has come to have information on the wealth of Affluent People and how the wealth gets employed for the benefit and growth of the economy. This may have to be separately compiled by the Income Tax Department and should be readily available for policy decisions. The income tax return of affluent Individuals should be different from base level Income tax payees. This may be of immense help to keep track of movement of funds and change of asset prices . The steep increase envisaged in financial and physical assets including equities gold and property as and when the economy expands and prospers, needs to be closely captured and factored into arriving at the tax rates without getting them into black money and wrong doings.
Digitalisation of transactions and widespread settlement of transactions through UPI
This is a remarkable achievement the country can be really proud of. However, the circulation of cash and generation of black money simultaneously along with the digitalisation of payments do not augur well to the overall governance system and this needs to be seriously introspected. The generation of data becomes easy in respect to digitisation and there should be some ways and means to capture cash transactions and reduce / eliminate them over a period.Since agricultural Income is exempted from tax, at least some returns from the angle of knowing the income generations from agriculture and related activities need to be introduced or collected indirectly .This may prove to be a boon to initiate many a policies to strengthen democracy, Governance standards, bring in Structural reforms and meaningful financial planning, Adoption of Artificial Intelligence can be considered to generate data in respect of agricultural income and black money generated through various ways in the system. Technology can be well utilised to fix frauds, corrupt practices and evasion of taxes by various means, resorting to taking advantage of regulatory and compliance gaps seen in the Governance system.
The setting up of a Gold Bank to find resources for the economic development and saving of foreign exchange by minimising / avoiding import of Gold can be seriously thought of through this budget. This measure may also facilitate the internationalisation of rupee and saving of foreign exchange for international trade.
Annual budgeting and Accounting information can be a good source of resources for planning and execution of all developmental policies and overseeing the fruits of development and spread of welfare among the people provided they are supported adequately by various tools and support systems to detect evasions and related headaches. The budget can think of rewarding some Universities for bringing out Research papers on Public Finance and helping the Government to come out with policy measures in the area of inflation, containment of black money, bringing in efficiency in the management of funds of institutions particularly Public Sector Undertakings etc. Let this year's budget exercise be a landmark for fulfilling the aspirations of all segments of the society alike and turn out to be a Ramarajya in letter and spirit. May the people anywhere and everywhere enjoy the economic growth and welfare measures and have an improved and enviable quality of life.
Loka Samastha Sukhino Bhavanthu.
T V G Krishnan
(views are personal)
