Union Budget 2015: Not the common man's budget

It was being billed as a big bang budget but there is almost nothing to suggest that. On the contrary, it is a workmanlike full year budget for Finance Minister Arun Jaitley with the focus directed more towards infrastructure so that the investment cycle can be revived.

The Finance Minister has given in to the demand of the industry and proposed reduction in corporate tax to 25 per cent from 30 per cent earlier. This should boost the investment cycle over the next 12-18 months, which could help revive the job market, a promise made during the election campaign. The finances of the government could be helped by a Rs. 69,500 crore disinvestment target for the next fiscal.

While the sharp cut in corporate tax may look good, the proposal to create an enabling environment for business and GAAR being deferred has certainly added to the comfort for business leaders.

The stringent penal provisions for black money is certain to set the cat among the pigeons. 10 year rigorous imprisonment for black money stashed overseas, 300 per cent penal tax on the concealment of money overseas and some of the other provisions have made the intentions of the government clear. Worse, those found concealing income will not be permitted to go to the Settlement Commission.

According to Forbes, India has the third highest number of billionaires after US and China. Since the government manages a mere Rs. 1008 crore from wealth tax, it has been done away with. A 2 per cent surcharge replacing wealth tax for the super rich should be easier for the government to administer.

The finance minister plans to incentivise the use of debit and credit cards and disincentivise the use of cash. Barring that announcement, there was nothing major to tout on curbing the black money menace within the country.

The middle class was expecting tax breaks from the party they voted to power just a few months ago. That has been a disappointment because barring the tax break for spend on health expenses to Rs. 25,000 from Rs. 15,000 and the odd other such rebate, there has been nothing to cheer about. Higher service tax means spending on telecom services, eating out and consuming other services will be more expensive.

The monetisation scheme for gold is an interesting experiment to tap into the wealth locked up in Indian homes. A sovereign gold bond scheme with a fixed interest rate will allow Indian to earn money out of their investment while the government can hope that gold imports will be curbed, cutting down India’s foreign exchange spend.

The finance minister has not put more money in the common man’s pocket. Clearly, it is industry that will have to drive the economic engine in the near term.

About the author: The article has been authored by veteran financial journalist Ashutosh Sinha