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General Budget 2013: Government to cut subsidies; rich tax unlikely to be imposed
The General budget for the fiscal year 2013-2014 will be announced on 28th February by the finance minister P. Chidambaram. The economy is not in a very comfortable position. So the chance of a populist budget seems improbable. However, in a bid to please the masses, to transform the negative perception they have about the government, the finance minister may not take harsh decisions. Seeing the present condition of the economy as

Noted economist D. Pai Panandiker says that the focus of the budget will be towards bringing down the fiscal deficit to the level of 4.8%. He said that in the budget the tax rates will not be increased but expenditure on subsidies may be cut down to reduce the deficit.

"The first thing that the finance minister is likely to do is to bring down the fiscal deficit to 4.8%. The question is how to bring down this deficit. There are two ways of doing it. One is you must either cut expenditure or you must increase revenue. As far as revenues are concerned, the chances of raising tax rates, I think is not a great (idea) because the economy is at a very low level. Any additional taxes will create condition where this growth will not pick up. So, I think the additional revenues should come only from the growth of economy. The focus of the budget should be on growth, which will ultimately throw up more revenues,” D.H. Pai Panandiker told this citizen journalist .

Elaborating further, Panandikar said that the government will not cut expenditure on infra and other projects which are directly linked to the growth of the country.

"The second thing is reduction in expenditure. I think there will be well placed lid at expenditures by various ministries and here the cuts in expenditure which is a way to ensure that every rupee spent is productive, would be the criteria for the cut in expenditure. So, I think the reduction in expenditure which is not going to affect production in the country will be there ( in the budget). But the subsidies can be cut. There are already some measure taken in this direction like diesel prices have been increased etc. This will be continued further. So this will be the core of the budget in my view,” Panandiker added.

The government had given some indication to impose more taxes on rich and introduction of inheritance tax. Panandikar said that in the upcoming budget the government will not introduce any such taxes including rich and inheritance taxes which adversely impact stock markets.

"I don't think government will introduce rich tax and inheritance tax in the budget because only the last year the two measures i.e. GAAR and Vodafone taxation with retrospective effect have created such negative effect on the economy that the new Finance Minister P. Chidambaram had to reverse the decisions of his predecessor Pranab Mukherjee, which is rarely done. So I think the FM will not create a situation in which stock markets are affected adversely,” Panandiker added further.

Agriculture sector is the area which is given important focus in every budget as a major population of the country is dependent on farming. Food policy expert Devinder Sharma has demanded that the government should announce the formation of National Farmers' Income Commission to decide the minimum fixed wages to the farming community on monthly basis.

Devinder Sharma also blamed that in the name of farmers the government extends the benefit of agri credit to the agri business companies. He demanded that the finance minister should separately announce how much credit is for farmers and how much is alloted to the companies.

The agri credit which was 5.75 lakh crore last year is expected to increase to 7 lakh crores. The reality is that less than 6% of this only reaches to the small farmers, who constitutes 82% of the total farmer population of the country. The major part of this will go to the agri business companies. In this budget the finance should clearly state how much he is giving to farmers and how much to the agri business companies,” said Devinder Sharma. The noted food policy expert also demanded introduction of subsidy on biological fertilizer and crop insurance to a full extent.

Fertilizer subsidy should be rationalized and reintroduced because the experience with decontrol of DAP and potash is very negative. It is also the time to stop subsidy on chemical fertilizers and shift it to biological fertilizers or manures. Thirdly crop insurance should be introduced in full,” added Devinder Sharma.

In a demand submitted to the finance minister P. Chidambaram industry body Assocham's Ladies League (ALL) have demanded Allocation of funds for self-defense training program for girls in schools. It demanded increase in government scholarships in higher education and secondary education for girl students. ALL has demanded increase in allocation for raising employability through effective spoken English Teaching and Communication Skills in Government Schools.

Providing the social equity perspective, Thomas Chandy, CEO, Save the Children, a non-profit organization, in an e-mailed response to this citizen journalist, said "As our recently released report Ending Poverty in Our Generation” has highlighted, rising inequality is a challenge that India needs to tackle on a priority basis. We expect that the government will present a budget that will address the needs of the most marginalised and disadvantaged sections of India. There are apprehensions that social sectors will see budget cuts across the board. We hope that the government will keep in mind the fact that India has a long way to go when it comes to tackling malnutrition, high IMR and MMR and poverty figures. Our child protection systems are in an abysmal state as has been evident through a spate of incidents of child sexual abuse and murder. To become a truly developed country the government must strike a balance between tackling fiscal deficit and development deficit. Economic growth cannot be sustained if it is not inclusive and pro-poor.

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