ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Annual Rigmarole

The budget has become a meaningless exercise with dicey figures and unkept promises.

Within a week of the presentation of the Union Budget for 2015–16, the fizz that we saw around it, in a gushing media, has gone flat. When the layers of packaging are removed, there is little in the core. There are only incentives and promises to powerful interests, and mirages for the rest. That is how it has been in the age of media hype and Union Finance Minister Arun Jaitley’s second budget is not very different from the smoke and mirrors that have come over the years to mark the central government’s annual financial statement.

An intriguing question is the shape Budget 2015 may have taken if the Bharatiya Janata Party had not been brought to earth when it was routed in the Delhi assembly polls. Would there have been “big bang reforms,” whatever that may mean other than a large-scale withdrawal of the state from the public sphere and freedom to employers to hire and dismiss workers as they wish? If, perhaps, there is one philosophy underlying this budget, it is a reaffirmation of the Narendra Modi government’s belief that the best driver of growth is the private corporate sector (PCS), with the foreign investor having pride of place; the government and public sector have a role only in the short term. The PCS — both Indian and foreign — had demanded much more from the budget, but enough has been given. If we ignore the irritants of minor increases in indirect taxes and the new 2% surcharge on incomes higher than Rs 1 crore, what we have is the promise to reduce the corporate tax rate from 30% to 25% over four years and a simultaneous reduction in exemptions. This will be implemented from 2016–17 onwards, but is enough to whet appetites because experience shows that exemptions never end. Like with many aspects of the now-abandoned Direct Tax Code, the PCS will be successful in having the rates reduced with a minimal removal of exemptions, and the effective rate may then rest below 25%.

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