The Interim Union Budget of India for 2019 was presented by acting Finance Minister Piyush Goyal on February 1, 2019, followed by a full budget, which was presented by the current Finance Minister Nirmala Sitharaman on July 5 this year itself, soon after Modi 2.0 was sworn in with a bigger majority.
Toeing the Modi line, Sitharaman said, “In 2019, India has become a $2.7 trillion economy, having added one trillion US dollars in the last five years. Our vision to become a 5 trillion dollar economy by 2024-25 is challenging, but it is realisable.” The worry is that the growth in the economy is slowing down and if the confidence in the market, and amidst investors, is not revved up, the dream of a five trillion dollar economy may not be realised by 2024-25. The upcoming Union Budget will be extremely crucial and the demand and supply side of the economy must be matched to set the ball rolling.
Sitharaman has some options in the upcoming Union Budget to provide the much-needed boost to the economy. The government has spoken about investing Rs 100 trillion in infrastructure. In the 2020 budget, the government can give signals on how, and in which particular sectors, investments would be coming. That would send the right message not only in India, but globally too. The government has to now speak about how it would support investment and growth.
With mining facing too many hindrances and many mines closed for environmental degradation, in the steel, aluminium or cement sector, the process of putting up a project, which used to be three-four years earlier has gone up to four-eight years. The auction process takes time and then comes land acquisition. The cost of land has risen 5 to 10 times. Second is how much would they be investing in different types of infrastructure. Third is to make these projects attractive so that jobs can be created.
Income tax is another area, which requires innovations. The middle class taxpayers have always been the giver to the nation ad they get no benefits from any of the social schemes announced by the government. The taxpayers were also excluded from world’s biggest health scheme called the ‘Ayushmaan Bharat’. Income tax rate in India is one of the highest in the world, considering the amount of so called ‘benefit’ which a taxpayer receives from the government. A mere raising of tax slabs is considered a ‘big tax exemption’. Hardly four per cent of the population actually pays this tax while another 2 to 3 per cent only file their returns.
Taxing on agriculture is an oft-discussed issue and it was also raised by NITI Aayog in 2015. The next day, the then Finance Minister Arun Jaitley had said, “we are not doing any of that”. In fact taxing of agriculture is a political hot potato, but there is need to do this not only from a revenue garnering perspective, but also as a means by which revenue is actually sheltered from taxation. This government has to campaign to position it in a way that only the rich farmers and large land holders will be taxed, if any.
What we require is a clear roadmap for the next five to 10 years that could say that from this rate we will bring taxes down to this figure. This will assure not only the corporate sector, but also investors and individual taxpayers who can plan their individual budget. It is an opportunity for Sitharaman and it should not be missed in February 2020. If not, recession is not far away.
