There is a cushioning impact for the upcoming union budget with inflation rate, which used to be higher, is at 3.6 percent, noted Dr. Kaiser Ahmed, professor of economics, Al Ameen College of Arts and Science, Bangalore. Food inflation has reduced, crude oil prices have reduced in the international market and the current account deficit is at 1 percent. The demonetization drive has created more problems as only 4 percent of black money is in the form of currency while the rest of it is in the form assets, and only 47 percent of the 86 percent of currency has been pumped back so far into the economy, Dr. Ahmed added. The global economic scenario is bleak with situations such as Brexit where countries are opting for increasing protectionism, he said while addressing a gathering during a pre-budget conclave jointly organized by the postgraduate department of economics and postgraduate department of mass communication, Center for Management Studies, Jain (Deemed-to-be University).
Dr. Kaiser Ahmed mentioned that growth must be coupled with economic stability. The sectors that need attention include agriculture, infrastructure and public sector undertakings. The other areas that need to be looked into include foreign direct investment, public private partnership and inclusive growth. Opening up economic corridors across the length and breadth of the country will also help in creating job opportunities and improve the economy thereby, Dr. Ahmed noted. Other promising areas of employment include education, healthcare and judiciary. The capital expenditure on defence has to be reduced, while subsidies need to be phased out in a gradual manner, he added.
Prof. Issac P Elias, professor of management, Christ University noted that agricultural income is not taxable although India is an agrarian economy. Tax should be introduced in this sector such that the rich farmers pay taxes, and recognition must be given to those farmers who do pay taxes, he added. There is a plea to reduce the corporate tax, which is at a 30 per cent now. If that is the case, there should be a mandate for corporates to spend 3 percent of their income on corporate social responsibility instead of the present 2 percent, he averred. He noted that one percent of the richest own 58 percent of the wealth and only one percent of 1.3 billion pay tax. On an average, around three crore of the working population file returns and 2 crore do not pay taxes at all, he added.
Dr. Mathew P M, professor of economics, Christ University noted that this will be a game changer budget with repair, relief and reform as the motto. The budget is being presented in a bleak micromanagement scenario. It cannot escape addressing the impact of demonetization on fiscal deficit, job creation and taxes, he added. The spending on healthcare should increase from the present 2 % to 6 – 7%, considering the population of the country, he observed.
The government should put in place the fiscal consolidation policy. Budgets generally are tied to certain political interests, noted Dr. Gayathri K of Institute for Social and Economic Change, Bangalore. She added that 40 percent of taxable income is held in litigation, and thus the tax administration has to be tightened.
Dr. Xavier V K, professor of economics, Jain (Deemed-to-be University) observed that the budget must be viewed pragmatically in terms of what the state can do and what the state cannot. The budget has three roles including allocation, distribution and stabilization. A development oriented budget is expected, he added.
All the panelists noted that this will be a historic budget as it is being presented a month in advance and the railway budget is being merged with it.