The way in which the finance minister began to introduce his direct tax proposals of Budget 2013 was a huge enough hint about what lay ahead.
P Chidambaram mentioned — almost complained — that the tax GDP ratio in 2011-12 had fallen to 5.5% for direct taxes and 4.4% for indirect taxes.
He went on to lament that these ratios are one of the lowest for any large developing country and will not garner adequate resources for inclusive and sustainable development. He recalled that in 2007-08, the tax GDP ratio had touched a peak of 11.9% and that in the short term, we must reclaim that peak. In other words, Budget 2013 was to be devoid of any major tax sops. And so it was.
At the end of the day, at least for the common man, Budget 2013 turned out to be more of a non-event.
There was very little if at all on how the Budget is going to help one combat rising prices and inflation. The FM’s speech made a brief mention of instruments that will protect savings from inflation in terms of Inflation Indexed Bonds or Inflation Indexed National Security Certificates.
He merely stated that the structure and tenor of the instruments will be announced in due course, however no other details were forthcoming.
Measures which will provide day to day relief to the common man have been completely ignored by successive Budgets and Budget 2013 was no exception.
For example, it is a joke that in the current day and age, an employee gets all of Rs800 per month as transport allowance! Or that the allowance to educate one’s child is a princely Rs200 per month! Or that the deduction on account of rent payable (for the self employed or where HRA isn’t available from the employer) is a mindboggling Rs2,000 per month.
The government chooses to provide a tax deduction for shares purchased on the stock market, but issues such as transport, education and shelter are deemed too minor to bother with.
Chidambaram ended his speech by saying that “Our work will be seen in our actions”. Mr FM Sir, India’s common man awaits your actions.
The writer is director at Wonderland Consultants
