The Union Budget presented before the Parliament on 29 February 2016 was not exactly a dampener. There was much good in it. But it was a lawyer’s budget.
Yes, it reduced the discretionary power that bureaucrats wield – especially in the tax department. It has found a way to settle past (vexatious) tax cases that have already been initiated under the old laws introduced with retrospective effect. It promised not to revisit investors with retrospective laws again.
It aims at doubling farmer incomes by 2022, partly by allowing for a transparent e-mandi, through which he can sell his produce; and partly by introducing amendments to the APMC (Agriculture Products Marketing Committee) which states can then take up. The land digitization scheme is welcome, especially because it will now be centrally administered from the coming year.
The fiscal consolidation programme remains unchanged, which does add to the credibility of India’s tax administration, even in a turbulent year.
Also read: Budget 2016 Highlights
All this is good. But the budget lacks the visionary spark that industry and the investment climate sorely needs. These are bleak times, and a little inspiration would have helped.
Here are three examples that the FM missed – completely.
First, the proposal that Nitin Gadkari, Union Minister for Surface Transport, had made a few months ago. He wanted the government to allow a 25% reduction in excise duty for vehicle purchases if it was done against the surrender of a vehicle that dates back to 2000 or earlier. This was a variant of the scheme that the US had introduced some time ago, and which was popularly knon as “Cash for Clunkers”. The Indian variant did not offer cash, but it was an inspirational scheme. A truck driver surrendering his 15 year old truck could purchase another truck with the excise rebate which would have saved him around Rs.2 lakh. An new SUV purchased against an old passenger car would have saved the customer upward of Rs.1.5 lakh. The customer could save Rs.50,000 on a Maruti 800.
The customer is thus incentivized to surrender his old car which then goes to the scrapyard, and is crushed and sent to the steel mills. The steel mill gets good quality scrap at reasonable prices. The automobile industry gets a spurt in demand. The government too benefits because it still gets 75% of the excise duty, when it might not have got any. And the environment gets a new, Euro IV compliant vehicle on the roads. That scheme could have given the auto industry a shot in the arms, and the markets a bit of excitement.
Similarly, the FM could have announced financial incentives for investment in waste to energy schemes, like the one that Ajoy Mehta, municipal commissioner, Greater Mumbai, has recently been advocating. It would have encouraged the country to set up waste to methanation plants in cowsheds, near sugar factories, in cites and even in farms. It would have excited foreign investors as well.
A third area where the FM could have done a lot could have been in primary education where the quality of schooling is terrible. But primary education is the very foundation for any child’s mental growth. All the FM could have done is to allocate financial incentives for states that allow 10 year olds to participate in national talent search examinations organized by the centre. That would have allowed the government to know how good or otherwise schooling is in different states of the country.
The list can go on. Those sparks were missing.
After all, the budget is not just a financial exercise for balancing books. It is also one which is actually meant to excite investors and entrepreneurs alike with schemes that are financially viable, socially acceptable, and nationally beneficial.
Unfortunately, there has been no such spark in the budget that was recently announced. Sigh!