This is the Lok Sabha elections season. The Union budget though technically “interim”, in practical it could be a full budget with many populist announcements. If finance minister Arun Jaitley finally has his way, it will be yet another first for Modi government that advanced budget date to February 1, one full month early. In an election year, the practice was to present the interim budget and President’s address put off to first session of the new government.
As per practice, a vote-on-account or approval for essential government spending for a limited period is taken before polls. Article 87 of the Constitution provides two instances when the President specially addresses both Houses of Parliament. President of India addresses both Rajya Sabha and Lok Sabha at the beginning of first Session after each general election when the reconstituted lower house meets for the first time. The President also addresses both houses at beginning of first session of each year.
This time round, the government is opting for the latter option to exude confidence and deliver a politically pregnant message that it’s on its way back to power for a second term. The opposition may protest but that would be to gain time on the noisy television and for academic purposes.
Unlike in the past, Parliament session would not be continuation of the winter session. The session was prorogued mid-January to help the government re-promulgate some ordinances, including the one on politically tricky triple talaq. There is no constitutional bar on the government laying down office in few months from making announcements as well. Advisors in the government seem to have suggested making best use of the Parliament window before the big political slugfest in the electoral arena.
Normally, President’s speech highlights the government’s policy priorities and provides a broad framework for the government’s agenda and direction.
Recent elections to five state assemblies especially Madhya Pradesh, Rajasthan and Chattisgarh has brought to fore growing discontent within the ruling BJP. Core assessment within the Sangh parivar led to alerting the government on its non-performance or faring far below the expected lines. Logically, sane advise from the parivar may be heeded to and the budget could include significant tax proposals, especially on direct taxes.
Industry lobby groups may also have paved the way for announcement on populist measures, particularly on direct taxes. The suggestion that may eventually find favour with finance minister Arun Jaitley could be to double the annual income to Rs 20 lakhs for falling into highest tax bracket at 30 percent tax. Suggestions to push for cut in corporate tax to 25 percent have also been doing rounds. Providing more benefits to salaried class and retired persons may gain support in run up to the budget. Demands for tax exemption on medical reimbursements and hospital expenditure for treatments in India or abroad have also come for serious consideration by the finance minister. Suggestions to avoid double taxation on items like provident fund also may be considered by Jaitley.
Transporters have been demanding removal of tollgates. They have been lobbying against payment of one-time fee on each of their vehicles. The tolls have been causing congestion and adding to travel time mounting heavy expenses despite online tags. Besides, Rs 1.13 lakh crore is being collected through Rs 8 a litre road cess on petrol making tolls unnecessary. The government and NHAI have made the moolah through these tolls.
Since the farmers and rural voters tilted the balance in the recent elections, agriculture ministry and NITI Aayog may finally prevail in announcing a farmer income scheme – a la Telangana pattern – on the basis of their land holding. Proposals to help farmers in marketing their produce may be rolled out.
There have been serious complaints on income tax notices served on startups. This has caused annoyance. Simplification of procedures may be considered and a tax holiday may be announced for these budding enterprises.
The middle class had felt ignored in the last budget. They have the wherewithal to turn the political tide. They along with farmers are piqued at the continuous increase in petrol and diesel prices. Recent hike in diesel prices have hit the farmers and transporters hard. They may look to some relief from the NDA government. Simplest way was to bring petroleum products under GST that’s being resisted by states. Instead, it may look at providing relief to petroleum companies for investment in exploration and marketing activities. The proposal looks “rational” as the country’s demand for crude is hitting the stratosphere. It will also benefit some large private companies that propose to invest in this sector.
In view of hue and cry on quixotic NGT order to scrap ten-year-old vehicles, government may make its policy clear on the issue. Some government agencies have reportedly felt that NGT order implementation has its on pitfalls. Policing and impounding of such vehicles was an expensive preposition. Destroying the cars may cost a lot and the junk in itself could be an environmental hazard. It is also sending a negative message. That may be corrected. There are also demands for allowing banks to accept more cash for transfers and ease online rules. Presently, the businesses and traders are finding it difficult to transfer cash earnings from remote areas even to their own accounts.
Banks do not allow cash transfer through NEFT / RTGS as per government orders. This has led to a thriving parallel banking. The business class has told the government this generates more black money than preventing it.
The government has also been told to encourage more cash transaction for ease of doing business, make bank’s KYC rules simpler based on permanent account number (PAN) that’s linked to Aadhar and do away with cumbersome procedures every now and then. World Economic Forum has said that India’s cyber transaction system was fraught with risk. This has led the businesses to stress on cash transactions and this would not lead to any “black” transactions. That cash is being ploughed in for use in polls. Before assembly polls, RBI report pointing to huge cash withdrawals sends out a clear message. Government has a long list of ‘to do’ issues. It is not likely to lose an opportunity to pander to people’s wishes and reap benefits at the hustings.
(The author is professor, dean & director at Mangalayatan University)