An 11-Point Agenda for the Union Budget
18 January 2018
Weighed down by internal pressures from the party to present a Budget that gets accolades from a large voter constituency in the face of General Elections 2019, Finance Minister Arun Jaitley, has a few ready options to pep up the economy.
1. Go all out to clear the misgivings on the Financial Resolution and Deposit Insurance (FRDI) Bill by incorporating oral assurances given in the Parliament into the proposed Bill.
2. Announce a winding up plan for the sinking PSBs instead of piling them on to those that are working efficiently.
3. Insist on all the banks to stick to banking work instead of selling third party products that carry hefty commissions as these products are invariably dumping unknown and unannounced risks on the unsuspecting users. Restart development banks to finance Infrastructure. Turn banks into growth engines.
4. Announce withdrawal of government funded programmes that failed to take off or made only a symbolic entry. Over 110 schemes launched for the Micro, Small & Medium Enterprises (MSMEs) failed to reach even 0.5% of the eligible enterprises. These resources can be earmarked to finance those schemes that showed performance.
5. Re-engineer financial incentives to go online only with appropriate safeguards also announced. Fiscal incentives have more transparency than financial incentives.
6. Scrap all the cess hat have no specific account of expenditure earmarked for them.
7. Appoint a committee to amend the treasury code with its rules formulated during the British Raj. This is the root cause of corruption and delays in the release of funds for government expenditure.
8. Announce the date for incorporating the related Rules whenever the Parliament passes a particular Bill, so as to remove ambiguity and ensure compliance. Every Act must have priority do-ables for all the stakeholders as an Abstract.
9. Introduce a modicum of agricultural tax, with a threshold of income over Rs25 lakh per annum. All the small and marginal farmers, as well as tenant farmers will be exempt as they would have not earned this much even for a five year period. The rate for them can be 10% over the Rs25 lakhs. Multiple slabs need not exist for them.
10. Manufacturing start ups should be tax exempt for five years or till their turnover crosses Rs2 crore.
11. All corporations spending a minimum of 5% on research and development or incubation centres recognised by the governments shall be exempt for such spend, treating it as Investment.
The FM would do well to make specific allocations for agriculture, education and social services that make good sense not just from the viewpoint of electoral benefits but as overall economic benefits. It is obvious that the Fiscal Responsibility and Budget Management Act, 2003 (FRBM) will be thrown overboard but for some jugglery with numbers. There are a few states like Telangana, AP and Karnataka that have introduced agricultural budgets. It will be necessary for the Union government to go in sync with the states in its ideal of cooperative federalism to ensure the outcomes.
(The author is Adviser, Telangana Industrial Health Clinic, Government of Telangana. Views in this article are personal.)