Swaminomics: Relief in financial deficit, tax exemption is fine, but a big danger is hovering!

Author: Swaminathan S Eklecaria Iyer
The middle class is very happy with the tax exemption given in the budget, but not the stock market. Why so? The reason for this is that in the speech of Finance Minister Nirmala Sitharaman, there was nothing on the recent decline in the market. he/she did not say anything even on the money reached the record. The rupee is in a bad condition since Donald Trump won the presidential election. The government had this Ilm. he/she also knew that after Trump became President, America’s relationship with many countries of the world was going to be uproar. Trump has announced to impose high import duty on Mexico, Canada and China since Saturday night. After this, he/she will also take such a step with steel, aluminum, chips, crude oil and gas. In such a situation, whatever announcements the Finance Minister has made in the budget, Trump’s talk will be more than that of the market. That is, Trump’s presidency is affecting India. We do not even know to what extent they can go on import duty.

Trump’s decisions are affecting

What will Trump do, what not, it is affecting the global economy today and India is not left from it. Emerging markets like India and money from other countries are going back to America as it is considered safe. Therefore, the measures that the Finance Minister has announced to increase the speed of growth can be neutralized due to Trump.

Financial deficit control

Well, the best thing in this budget is the financial deficit control, which has managed to keep the Finance Minister GDP up to 4.4%. It was 9.2% five years ago. During this time, she increased the capital experience and gained 7% growth with a decrease in financial deficit. he/she should be praised for this, even if the dividend (dividend) received from the Reserve Bank also contributes to it.

Financial miseries are not over

Nevertheless, it must be said that India’s financial miseries are not over. The country’s liability on government borrowing for the second consecutive year is 44.9% of the total income of the Center, which is very high. This ratio is more than 39.7% of 2018-19. If the global growth is less due to the arbitrariness of Trump, then India will also have an impact. This can prove to be wrong in the budget.

Consumption will increase

Many experts feel that the budget will increase the consumption (consumption) as they have given a tax exemption of Rs 1 lakh crore. But his/her opinion is wrong. In fact, the reduction in tax from the tax cut to the economy can be ineffective by cuts in capital experience. In this budget, the capital experience has been increased from Rs 11.1 lakh crore to 11.2 lakh crore. This step may benefit consumer goods companies at the cost of capital goods and infrastructure companies. Therefore, it is not a speeding budget to the economy, but to control the financial deficit, the budget is undoubtedly a milestone. But it will also have to be remembered that the country has to go a long way in this matter.

The meaning of so much tax exemption

There are many countries in the world where the tax exemption limit is close to per capita income. India’s per capita income is Rs 2.3 lakh and the tax exemption limit has been increased to Rs 12 lakh. This is 5 times more than per capita income. The per capita income in the US is $ 82,000, but the tax exemption is $ 14,600. This is just a little more than 16% of per capita income. If you are thinking that it is wrong to compare India with America, then India has the highest tax exemption in South Asian countries. It is Rs 1.87 lakh in Pakistan, which is only 10th part of India.

I think India has made a mistake here. For years, there is talk of increasing the scope of taxpayers in the country, but by increasing the tax exemption limit from Rs 7 lakh to Rs 12 lakh, this scope will be much smaller. So even though it is a good political step, it cannot be considered a good economic step.

Focus on electoral state

The Finance Minister has also shown that she wants to do a lot for Bihar, where elections are to be held this year. So in the budget, he/she announced the new airport for the state. Also, he/she also proposed the expansion of Patna Airport. Along with help for West Kosi Kanal, there was also mention in speech to pay attention to tourism based on Lord Buddha. The Makhana Support Mission was also announced along with the expansion of IIT in Bihar.

New income tax bill

The Finance Minister has promised the new Income Tax Bill next week. The question is why it was not included in the budget? Well, the answer will also be found soon. It has been indicated that through this the law will be made easier so that the dispute and the number of cases decrease. The Finance Minister announced to abolish the seven rates of the custom. Last year too, he/she ended seven rates. Now there are eight such rates left, which are more. Nevertheless, he/she deserves praise for this step.

Regulatory reforms also talk

The Finance Minister also spoke of confidence -based regulatory reforms. A committee will be formed, which will review permits, licenses and sanctions in all non-financial sectors. More than 180 legal provisions have been declared non-criminal through the Jan Vishwas Act, 2023. Nirmala has promised to make more than 100 provisions non-criminal, for which she will bring a new bill. These are good remedies for long periods, but neither investors nor middle classes will be happy right now. However, the impact of these measures will be much higher than the tax exemption in the long term.