Major I-T cuts, incentive for oil companies and easing up bank norms for cash transactions are expected during the Interim Budget
On February 1, the Modi Government will present its last Budget before the general election. Technically, this will be an ‘interim’ Budget but practically, it will resemble a full Budget Session as several populist measures are on the cards. It will be another first for the Narendra Modi-led NDA Government after it departed from the colonial tradition of presenting the Union Budget on the last working day of February to the 1st of the month. As per practice, in any election year, the ruling Government presents an interim Budget even if there are chances of it coming back to power. As per rule, a vote-on-account or approval for essential Government spending for four months is taken before the polls. Article 87 provides two instances when the President specially addresses both Houses. One at the beginning of the first Session after each general election when the reconstituted Lower House meets for the first time and the other at the start of the first Session of each year.
This time, the Government has opted for the latter to not only exude confidence among the people but also give a pregnant political message that it will come back to power. Unlike the practice in an election year, the Budget Session will not be a continuation of the Winter Session. A fresh Session was prorogued mid-January to help the Government re-promulgate some Ordinances, including triple talaq. What’s the harm? Government advisors suggested it to make the best use of the window and that’s about it. There exists no Constitutional bar on making announcements. Coming back to the President’s speech, it essentially highlights the Government’s priorities and provides a broad framework of its agenda and direction. So, unfinished agenda could be completed to attract people. That is a tall order indeed.
The Assembly elections to the three Hindi heartland States brought to the fore growing discontent among the people. Core assessments within the parivar, too, gave warnings about the Government’s performance. The Government will, therefore, use the opportunity to bring more expanded sections of tax proposals, including a number of direct tax announcements. Industry bodies like the Federation of Indian Chambers of Commerce & Industry (FICCI) and Confederation of Indian Industry (CII) have already paved the way for the announcement of populist measures, particularly on direct taxes. FICCI suggested revision of tax slabs for individual taxpayers with the top 30 per cent rate to be applied beyond Rs 20 lakh annual income. It also recommended a cut in corporate tax rate across the board to 25 per cent, irrespective of turnover. The CII called for more benefits to the employees and retired citizens. It demanded that retired employees must be entitled to the tax benefit on medical reimbursements as well as hospitalisation expenditure. Then there are the transporters, who have been raising demands to unclog the toll gates. They are more than prepared to pay one-time charges for their vehicles. Not only do tolls cause congestion but also add to their travel time, thereby mounting their expenses. Further, Rs 1.13 lakh crore is being collected through Rs 8 per litre road cess on petrol and diesel. The Government and the National Highways Authority of India are exactly the ones who have been extracting profits.
Since farmers and rural voters tilted the balance in the recent elections, the Agriculture Ministry and NITI Aayog have been discussing the possibility of announcing a farmer income scheme on the basis of their land holding. Also on the cards are ways to help the farming class in their marketing endeavours. The middle class, too, largely felt ignored in the last Budgets. They and the farming community are piqued by the continuous rise in oil prices. The simplest way to bring relief is by bringing products under GST. But the Government may not tread this path. Instead, it may announce relief for petroleum companies for investment in exploration and marketing activities. The proposal may look ‘rational’ as India needs more oil but it will benefit large private companies. On the banking front, there are demands to allow banks accept more cash for transfers and ease of online transfer rules. At present, businesses and traders are finding it difficult to transfer cash earnings. Banks do not allow cash transfer through NEFT/RTGS as per Government orders. This has led to a thriving parallel business. The Government has also been told to encourage more cash transaction for ease of doing business, simplify KYC rules and base it on the permanent account number, which is linked to Aadhaar and do away with cumbersome procedures every now and then. The World Economic Forum has said that India’s cyber transaction system is fraught with risk. This led the businesses to stress on cash transactions and they say this would not lead to any “black” transaction. But cash is still being used during polls. The purpose remains unresolved. It’s a tall list for the Government. But it is not likely to lose an opportunity to pander to the people’s wishes and reap benefits at the hustings.
(The writer is a senior journalist)
