A TEST FOR THE BUDGET

The Budget is slated for 11th July. The question before the public is what kind of a Budget will come? There are two cherries. The first is that there is a paradigm shift required, since for the first time a particular ideology has got a clear majority after Independence. If the BJP or its previous avtar, the Jansangh or the Sangh Parivar, follows its own ideology, the Budget has to be totally a novel concept. It has to be trade friendly, middle class friendly and against Inspector Raj and corruption of the bureaucracy. But this requires major changes. In the Congress or even in the other regimes which came for short periods, the same formula was followed with little-little changes of hardly any consequence. Today, we have a system where the bureaucracy, especially the lower bureaucracy, is so firmly entrenched that nothing can happen without files passing through them and their hands being greased. Can the BJP, can the first Budget address this question? That is the first thing in the public mind.
The second of course is that the problems are too big and the first Budget cannot afford to reopen this whole issue. Therefore they will follow the soft option of increasing the exemption limit a little so that the middle class gets relief, but not major changes. That appears to be the common view. Unfortunately, at the election time, inflation was a major issue. The cost of living was going up, almost all items including cereals, vegetables and as usual onions were in the limelight that they had become unaffordable. The BJP, when they saw that power is coming they started diluting because they understood that inflation cannot be controlled in a day. They said it takes six months to reduce inflation which means after six months the rate of increase of prices will decrease. Prices will not decrease. They never promised that. That will be difficult. Now, coming to practical ways of working, prices of wheat and rice can definitely be brought down by releasing stocks from the Government stocks. With their coming into the market — whether they go to the PDS system or go to the open market, availability will be more and prices will come down. But that will not apply to vegetables. Vegetable prices are mercurial. In Delhi, there will be one price. In Gurgaon, there will be another price. In Manesar, there will be a third price. Because the growers are local and the shelf life of vegetables is short. So this is the cost which cannot be controlled by the Central Government at all. What can they do? They must initiate steps for better transportation of these vegetables so that they reach the Mandis quickly and they must activate their officials at the district level. That is the only way. I happen to have some information on Rajasthan. There is place called Nawalgarh, from where I do a lot of NGO work. People in Nawalgarh told me that the prices of vegetables in Nawalgarh are the highest in that whole Shekhawati region. I asked them why. They said the local vegetable vendors have made a cartel and they have decided that we will not sell the vegetables at less than this price. Now, how can this problem be addressed by the Central Government? But we will have to find ways in which they fulfil this promise otherwise the disenchantment will be very fast. If the cost of living, the cost of foodstuff does not come down in a reasonable period people will start saying this is a Government like the last Government. And frankly, anybody who understands economics or the country’s complex economy, will understand these are not problems which can be fixed very fast, they take their own time. It is all right. The person sitting in the seat will get all the flak. Chidambaram was criticised not only by the Opposition but by the Congressmen themselves. But, as Chidambaram himself said in a public address, the Finance Minister’s job is very good when the economy is doing well, but when the economy is not doing well it is a very tough job. What can he do? If the world economy of America has gone down, Europe has gone down, how can India go up and India has not gone down that much. India has kept its level.
Now the challenge before the new Finance Minister is whether he wants to continue in the same pattern with little changes or risk making some major changes. The last person who took a risk was VP Singh, when he became Finance Minister under Rajiv Gandhi in 1985. He was the first person who had the courage to say that the income tax rate should be brought down because nobody is paying income tax at its rates. Everybody is cheating. And he brought the rates down. He brought the long term fiscal policies in which he promised that over the next five years the rates of income tax will not be increased. I think the time has come when the new Finance Minister should take a leaf out VP Singh’s book that Government should promise certain things, that we are not going to change this, give some confidence, some stability to the tax payers that don’t worry, we are not going to increase your problems. And at the same time make tax collection easier. A stage has again come when some relief is required, because except the corporate sector and those poor salaried people whose tax is deducted at source, who has been paying taxes? The traders and businessmen do not pay taxes. They fudge their accounts. They show a turnover of 1 crore and a profit of 1 lakh. It is laughable, unbelievable. But the income tax officer accepts it because he gets the money. All this must stop in this country. And it can only stop if the law is user friendly. The traders should be encouraged to pay tax. Today, the encouragement is to evade tax because he will never get caught. How many people will you raid? How many people will you inquire into? And who will inquire into it, the same officials who are more interested in making money on the side than getting money for the Treasury.
Is the Finance Minister ready to go back, if I may use the word, to what they have always been complaining. Minoo Masani, Piloo Modi, they always used to complain that the Inspector Raj does not help anybody. Today, the wheel has turn full circle, they have come to power. Are they prepared to implement what they have been saying? That is a test for this Budget. Let us see what happens.

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