Budget 2015: Things are bright and the roadmap is clear

The country has woken up to a new budget, and a new way of doing things that we generally do with money. This would probably be a serious indicator of how things would progress for the next four years. The NDA government has its vision set pretty clear on how and when things would change, and also for whom.

It takes more than just a cursory glance to read the budget between the lines and understand what it means to every section of the society. While some of the redundant and dormant schemes have got less money, and health didn’t get a major boost; the country seems to be getting ready to roll out red carpet for investors. The weatherman says India is getting ready to take a huge leap and these are small steps that can ensure that we have tested the waters before going for a long swim.

For once, this budget presented a different way of doing things from what we have been used to, since the last so many decades. There are no big ticket schemes that are to be dreamt of, instead lots of indicators that are going to keep India motivated to walk the distance to find the light that’s been peering at the end of the tunnel.

Read the fine print and you will understand when the wealth tax was removed this time, it was not to help the rich become richer and the poor remain poorer. Instead, a surcharge of 2% has been introduced to cover those who are earning more than Rs 1 crore per annum. And, mind you, the punishment for having avoided tax just got more stringent. Now that there has been a talk of black money, there is also a sop offered to those who have stashed money in the comfy environs of Swiss bank. It is to declare and bring back their money in a one-time-opportunity or, face jail with chances of spending the next 10 years in dark cells and bunkers if convicted of the offence.

The budget is surely a game changer. Well-known economist and vice-chairman of NITI Ayog Arvind Panagariya said the budget had moved on, on a lot of important issues. According to him, salient features are the most prominent aspects of the budget, but these are missing from the popular list of discussions among commentators of economy. Bankruptcy law, for instance is a huge step forward, but this has not yet reached the discussion forums. A modern touch to this law can change a lot of things for the country and its people.

Whether the budget boosts growth through consumption expenditure or investment rising is something that needs to be seen. Overall, there are aspects that are going to be the most impactful features of this year’s budget. Infrastructure is another major plank in the budget that would bring a relief to the workers in the organized sector. ESI and EPF will be major game changers which would play a major role in boosting the environment in organised sector.

Referring to the salient points of Budget 2015, Mukesh Butani, Chairman, BMR Advisors says the budget seems as focused as it could be.
“From a policy standpoint, the FM has engineered the Budget around the Prime Minister’s initiatives such as ‘Make in India’, ‘Swacch Bharat’, and ‘Skill in India’. The focus on black money and curing the economy off this menace seems to have taken centre stage. The impetus to Infrastructure, Agriculture and Education sectors is laudable though the much expected big bang reforms are yet in the waiting,” says Butani.

Budget may have raised heckles among the rich, but integrated middle class and senior citizens to some solace. “The tax policy messaging in the Budget is clear though the fine print would tell us more on what is proposed. Promoting foreign investment and assuring foreign investors of a stable and non-adversarial tax regime continues with proposals for rationalization of indirect transfers, non-applicability of MAT to FIIs, deferment of GAAR, relaxation of sourcing rules on account of fund managers in India, and reduction in royalty and technical service fee rates. The Budget also contains many benefits to the elderly and the middle class, though the super-rich have some more reason to frown,” Butani adds.

He further says, “FM has been most conservative in tax collection targets. He has estimated tax buoyancy of 10, 12 % in corporate tax and individual tax collections. He has been most bullish on service tax buoyancy at 24 % due to pruning of exceptions and raising the service tax rate to 14%. He has infact raised the effective revenue deficit target from 1.8% to 2 % before returning to effective revenue deficit of nil in 17-18. I think this is not just a rational tax collection targets, but it would relieve field revenues officers to not resort to coercive measures for tax collections or make high pitched assessments. I also feel that given the growth predictions, FM will collect more than what he has estimated and his revenue deficit target seems to be like under promise and over deliver.”

If this anticipation turns out to be right, then Budget 2015 will have more red than blue in its cheer.