A paperless budget

The much-awaited Union Budget for the Financial Year 2021-22 was presented on Monday by the Finance Minister Nirmala Sitharaman. It was the country’s first paperless budget. The acmes of the budget are: boost to healthcare; Fiscal Deficit pegged at 9.5%; some tax exemptions; capital infusion to banks; disinvestment and sale of Public Sector Undertakings (PSUs); scrapping of stale vehicles; highway ventures in some states and so on. How the Fin Min has demonstrated the Budget and the way news channels have been reporting that, it appears that something enormous has been proposed by the policymakers. The budget, however, is overstated. Barring from a couple of substantial positives, the budget has nothing unique to offer. Except for being paperless, there is nothing fresh. Except for a possible healthcare refinement, there is barely anything for the common man. The tax exemptions for geriatric citizens, sale of PSUs, Fiscal Deficit of 9.5%, major highway projects are only an eyewash. The budget does not offer that which the announcements seem to accentuate.
After a year-long raging pestilence of coronavirus, an upswing to the healthcare of India was anticipated. This has been well received by the government. Forthwith, healthcare is going to get a reasonable chunk of the carton of resource allocation. In this vicinity, Fin Min has proposed Rs 2.23 lakh drores. This is 137% of the previous allocation. Earlier, healthcare received a meagre Rs 0.96 lakh crores (around 1.5% of GDP). Now, this amounts to more than 3% of Gross Domestic Product (GDP). If executed competently on the ground, it is going to be a huge solace for the commoners. This has to be observed in the coming times. In addition to that, Rs 35,000 Crores have been allocated to Covid 19 vaccination.
Another high point of Monday’s budget has been the Fiscal Deficit. As economists had been pressing for a balance between fiscal prudence and spending, the NDA government has, on paper, plotted the figure to be 9.5% of GDP. The Fin Min went on to forecast and plot that it is going to descend to 4.5% in the years to come. Fiscal Deficit, in a layman’s language, means the difference between a country’s earnings and expenditure. The lower the deficit, the better the economic standpoint. Sitharaman proposed a few financial instruments like approaching the market, borrowings, etc. to make this milestone reachable. This, however, is not an easy task. Time will test it.
Similarly, the concept of a ‘Bad Bank’ has been submitted. As per our understanding, it would be a bank that embraces bad loans of various banks into its kitty. Accordingly, there would be a sole bank looking after the poor debts of all banks. This would centralise the focus on Non-Performing Assets (NPAs). This way, other banks would be able to concentrate on their core business without fretting to handle bad loans. That chore would be left for the ‘Bad Bank’ to address. It is yet premature to comment on the viability of such a bank. This could be understood once all the details of the capital and framework are made available by the administration. For now, it looks like to be a good idea. In addition to this, a capital infusion of Rs 20,000/- Crores into the Public Sector Banks (PSBs) will be made in the coming Financial Year. This would be made to equip banks to meet regulatory benchmarks and make them capable of lending and thereby bolstering public spending.
Having said that, a lot has been shirked and snubbed in Budget 2021. Likewise, most of the highlights look fair on paper and not in actuality. For instance, the so-called tax exemption to senior citizens. Let’s break it to understand. Those aged above 75 are exempted to file Income Tax Returns (ITR). Please do not confuse it with income tax relief. It just means that they do not have to submit the returns provided they earn from pension or bank interest only. They have to pay the taxes as they have been paying. There is no relief in that. Now, what is the benefit in it that the Fin Min has highlighted it with emphasis? It is an insignificant and negligible relaxation. Nothing special in it. Furthermore, for the general populace, ITRs would now come with prefilled data about salaries and bank interests, if any. It is another trivial change. It would have been great if there would have been a slash in the tax rates that the general public is burdened with. The tax slabs are unchanged. It would have been praiseworthy if the government would have loosened tax component on the goods and services that common people consume. We still live in a country where a middle-class person, earning Rupees five to seven lakhs a year, is burdened with immense tax deductions. We still live in a country where an ordinary man pays through nose if family dinner is organised at an affordable restaurant. After GST, goods and services consumed by the middle class have become expensive. There is no aid to this agony.
In addition to this, there is something that the government has not exaggerated. Now there is a scrapping policy of obsolete vehicles. If you have an old car at home which is more than 20 years old, you have to make it undergo a stringent fitness test—one which your car is likely to not pass. If it fails, it would be reduced to an antique showpiece and nothing else. Means you have to scrap it and buy a new one. Daily use items like smartphones, air-conditioners, LED bulbs will be costlier and precious metals will be cheaper. This is our misfortune. Common man survives on food and clothes and not on rubies and sapphire.
Similarly, the major highway development tranche of nearly Rs 2 Lakh Crores has been announced. It will cover 8,500 kilometres of highways in four states: Kerala, Tamil Nadu, West Bengal and Assam. To our utter amazement, this bonanza is for poll-bound states. There are more than a dozen other states and half a dozen Union Territories where no such big undertakings have been awarded.
Coming to government-owned banks and companies; they are now on sale. Government is scheming to privatise and barter its organisations. Have you ever heard of a head of a household who takes pride in the sale of his assets? Here it is. Rather than improving and growing public sector undertakings, this government is going to put them on an auction! A sale is not a solution to the problem. Proper planning and systematic interventions are the keys.
Postscript: The budget has failed to honour the important matters like that of Education, Tax and Growth. We still live in a country where a weapon receives way more than what a pen receives. Vegetables, foodgrains, fruits, travel and education are becoming unaffordable day by day. Common people spend a year settling with taxes directly and indirectly. Joblessness has ruined our youth. At such times, a people-friendly budget was the need of the hour. We did not want an exaggerated budget. It is not enough.