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THE HINDU: A message aimed at the heart of India
Stung
by the criticism of being a suit boot ki sarkar and by the National Democratic
Alliance’s electoral
reverses in Bihar, Finance Minister Arun Jaitley has made bold to address
the perception deficit in announcing a raft of proposals aimed at the rural
sector and farmers.
From a cess of 0.5 per cent on all taxable services that
would expressly be used to finance improvements in agriculture and schemes to
benefit farmers, to a dedicated long-term irrigation fund with a corpus of
Rs.20,000 crore, the Union Budget seeks
to pave the path for making good Prime Minister Narendra Modi’s promise to
double farm incomes by 2022. Other measures to further this course include
an outlay of Rs.19,000 crore that the Central government will spend this year
on rural roads as part of its goal to ensure that all habitations are connected
by 2019, and a push to achieve universal village electrification in the next
two years. Between improved road connectivity and the availability of
electricity, the potential is significant for a multiplier effect on the rural
economy and improvements to the quality of life for residents of the hinterland.
Two more steps are noteworthy. The Budget proposes the introduction of a health
insurance scheme that would provide up to Rs.1 lakh as coverage against
hospitalisation costs for economically weak households, with senior citizens
above the age of 60 eligible for another Rs.30,000 in top-up cover. While the
sum offered as protection is low by most standards for contemporary critical
in-hospital care, especially in the private sector, for the indigent this could
well mean the difference between not even attempting to seek medical care and a
chance at surviving a debilitating illness. The other, equally laudable,
initiative is to provide all families below the poverty line with cooking gas.
This can afford those in underprivileged homes the dignity of a quicker and
less harmful way to keep their kitchen fires running.
From a larger macroeconomic perspective, Mr. Jaitley has
for now said he will stick to his prior fiscal deficit commitments, but he has
simultaneously flagged the need for more flexibility in dealing with situations
when overall economic conditions are unfavourable. For this he has proposed the
setting up of a committee to review the entire road map mandated by the Fiscal
Responsibility and Budget Management Act of 2003 to study the possibility of having
a target range instead of fixed numbers that would give the government the
needed policy space to align a fiscal expansion or contraction with credit
availability. For the individual tax payer, the Budget offers little to cheer,
save some tax sops that lower and middle income families can leverage to invest
in affordable housing, or squirrel away some more cash from an increase in the
deduction towards house rent. The salaried class is likely to feel hard done by
a move to tax 60 per cent of the corpus created from contributions to the
Employees’ Provident Fund starting April 1 as part of a move to create a
‘pensioned society’. With elections to five provincial Assemblies due this
year, Mr. Jaitley’s focus on the rural and agrarian communities is clear proof
that the Budget still retains its relevance as a powerful messaging tool of a
government’s political stances. Whether Budget 2016 will engender a harvest of
votes, only time will tell.
raft
A flat buoyant
structure of timber or other materials fastened together, used as a boat or
floating platform.
cor·pus
A collection
of written texts, especially the entire works of a particular author or a body
of writing on a particular subject.
hin·ter·land
The often
uncharted areas beyond a coastal district or a river's banks.
in·di·gent
Poor; needy.
man·date
Give (someone)
authority to act in a certain way.
squir·rel
An agile
tree-dwelling rodent with a bushy tail, typically feeding on nuts and seeds.
en·gen·der
Cause or give
rise to (a feeling, situation, or condition).
BUSINESS STANDARD: Mr
Jaitley delivers
Arun Jaitley's third Budget is a masterly combination
of good economics and good politics in the face of a challenging fiscal
situation. He has delivered his basic objective of observing fiscal discipline
for the third year in a row-something that few finance ministers can claim. In
the process, he has reduced the government's borrowing programme for a second
successive year, and controlled the share of revenue that is eaten up by
interest payments. He has got a response in terms of lower interest rates in
the bond market, and put the onus on the Reserve Bank of India (RBI) to respond
by lowering policy rates. RBI must recognise that real interest rates are too
high and affect personal as well as corporate spending behaviour.
Politically, Mr Jaitley has prepared the ground for some talking points in a 2019 re-election campaign: 'Bijli, Sadak, Cooking gas' would be a substantial claim to make, given the targets set for universalising access to these by 2019. That's not a good substitute for jobs, but the Narendra Modi government has clearly shifted its attention from the urban and the middle class, which finds no mention in Mr Jaitley's Budget speech except for their having voluntarily given up the gas subsidy. The new focus is on the poor, the downtrodden, the vulnerable and the farmer-all of whom find repeated mention in the speech, along with announcements on crop insurance, accelerated irrigation programmes and a more broad-based procurement programme as a price support measure.
The shift towards greater progressivity in taxes fits into the political framework of the Budget. The higher tax surcharge at the top end will affect between 50,000 and 100,000 people (the "0.01 per cent"), as will the new dividend tax in the hands of the recipient. The more generous exemptions on income tax and housing incentives are given for those at the bottom end of the income scale, while cars too have been taxed progressively. All this is entirely unexceptionable; where there is an additional burden, it is not very onerous and falls well within the capacity to pay.
The arithmetic of the Budget is commendable-though the current year's numbers have been saved by additional taxes on petroleum products, which have made up for the shortfalls in corporation and income tax collection (pointers to the state of the corporate sector). For next year, Mr Jaitley has managed the difficult feat of sticking to the fiscal correction track despite the burden of the Pay Commission's award. This has been done through exceptionally tight expenditure control-other than pay and pension, the expenditure increase is barely six per cent; the increase is nothing at all in inflation-adjusted terms. Many Budget items have been squeezed, including defence, but unfortunately not subsidies-which is particularly regrettable after the savings on the petroleum subsidy.
Transfers to states, when viewed over a two-year perspective, show an increase of 31 per cent, suggesting that the government has used various stratagems to partially neutralise the over-the-top generosity of the Fourteenth Finance Commission-including through the creation of a rash of new cesses whose revenue does not get shared with the states. This is poor fiscal practice, and should be abandoned. Equally poor practice is the continuing business of announcing specific changes in taxes and duties on individual items of production-something that encourages business lobbies to get active. The objective should be to take a permanent break from the bad old tax habits and move towards uniform tax rates. Meanwhile, for the second time in three Budgets, Mr Jaitley has fiddled with the qualifying period for capital gains tax exemption. He first raised it for debt mutual funds to three years, equalising it with investments in real estate, but has reduced it now for unlisted stocks to two years, even as the period for listed stocks remains at one year. Surely there is a case here for some rationalisation. The same goes for the introduction of a dividend tax in the hands of the recipient, as it kills the logic of the dividend distribution tax. Simplification would be achieved if the latter were scrapped and all dividends taxed in the hands of the recipient.
However, the finance minister needs to be complimented for the most sweeping set of announcements yet for facilitating tax compliance, reducing the scope for disputes and clearing the backlog of cases in appeal. The widening of the window for a presumptive tax regime has much to commend itself, as do the steps for reducing the interface between assessing officers and assessees, for reducing the scope for harassment (which is still widespread), and for increasing transparency. These are significant steps in the broader programme for improving the ease of doing business in the country. The window for making good on past tax evasion may work better than the unsuccessful scheme announced last year, given the comparatively lower (but still punitive) tax that disclosures will attract. Other initiatives to be commended are the belated introduction of an exempt-exempt-tax regime for long-term savings schemes. But the switch to a lower corporate tax regime is timid, being too limited in scope.
On the expenditure side, Mr Gadkari as transport minister should be the happiest member of the Cabinet since he has got the most generous outlays for the roads programme, in a Budget that otherwise stands out for tight expenditure control. In the space of two years, his ministry's outlay has grown from Rs 28,679 crore to Rs 1.03 lakh crore, an exceptional increase of 260 per cent. This has the additional merit, along with the incentives given to low-cost housing, of boosting construction which, after agriculture, is the country's largest provider of employment. Along with the big capital Budget for the railways, and a power programme that focuses on clearing up demand bottlenecks, the overall infrastructure sector has got due attention.
Politically, Mr Jaitley has prepared the ground for some talking points in a 2019 re-election campaign: 'Bijli, Sadak, Cooking gas' would be a substantial claim to make, given the targets set for universalising access to these by 2019. That's not a good substitute for jobs, but the Narendra Modi government has clearly shifted its attention from the urban and the middle class, which finds no mention in Mr Jaitley's Budget speech except for their having voluntarily given up the gas subsidy. The new focus is on the poor, the downtrodden, the vulnerable and the farmer-all of whom find repeated mention in the speech, along with announcements on crop insurance, accelerated irrigation programmes and a more broad-based procurement programme as a price support measure.
The shift towards greater progressivity in taxes fits into the political framework of the Budget. The higher tax surcharge at the top end will affect between 50,000 and 100,000 people (the "0.01 per cent"), as will the new dividend tax in the hands of the recipient. The more generous exemptions on income tax and housing incentives are given for those at the bottom end of the income scale, while cars too have been taxed progressively. All this is entirely unexceptionable; where there is an additional burden, it is not very onerous and falls well within the capacity to pay.
The arithmetic of the Budget is commendable-though the current year's numbers have been saved by additional taxes on petroleum products, which have made up for the shortfalls in corporation and income tax collection (pointers to the state of the corporate sector). For next year, Mr Jaitley has managed the difficult feat of sticking to the fiscal correction track despite the burden of the Pay Commission's award. This has been done through exceptionally tight expenditure control-other than pay and pension, the expenditure increase is barely six per cent; the increase is nothing at all in inflation-adjusted terms. Many Budget items have been squeezed, including defence, but unfortunately not subsidies-which is particularly regrettable after the savings on the petroleum subsidy.
Transfers to states, when viewed over a two-year perspective, show an increase of 31 per cent, suggesting that the government has used various stratagems to partially neutralise the over-the-top generosity of the Fourteenth Finance Commission-including through the creation of a rash of new cesses whose revenue does not get shared with the states. This is poor fiscal practice, and should be abandoned. Equally poor practice is the continuing business of announcing specific changes in taxes and duties on individual items of production-something that encourages business lobbies to get active. The objective should be to take a permanent break from the bad old tax habits and move towards uniform tax rates. Meanwhile, for the second time in three Budgets, Mr Jaitley has fiddled with the qualifying period for capital gains tax exemption. He first raised it for debt mutual funds to three years, equalising it with investments in real estate, but has reduced it now for unlisted stocks to two years, even as the period for listed stocks remains at one year. Surely there is a case here for some rationalisation. The same goes for the introduction of a dividend tax in the hands of the recipient, as it kills the logic of the dividend distribution tax. Simplification would be achieved if the latter were scrapped and all dividends taxed in the hands of the recipient.
However, the finance minister needs to be complimented for the most sweeping set of announcements yet for facilitating tax compliance, reducing the scope for disputes and clearing the backlog of cases in appeal. The widening of the window for a presumptive tax regime has much to commend itself, as do the steps for reducing the interface between assessing officers and assessees, for reducing the scope for harassment (which is still widespread), and for increasing transparency. These are significant steps in the broader programme for improving the ease of doing business in the country. The window for making good on past tax evasion may work better than the unsuccessful scheme announced last year, given the comparatively lower (but still punitive) tax that disclosures will attract. Other initiatives to be commended are the belated introduction of an exempt-exempt-tax regime for long-term savings schemes. But the switch to a lower corporate tax regime is timid, being too limited in scope.
On the expenditure side, Mr Gadkari as transport minister should be the happiest member of the Cabinet since he has got the most generous outlays for the roads programme, in a Budget that otherwise stands out for tight expenditure control. In the space of two years, his ministry's outlay has grown from Rs 28,679 crore to Rs 1.03 lakh crore, an exceptional increase of 260 per cent. This has the additional merit, along with the incentives given to low-cost housing, of boosting construction which, after agriculture, is the country's largest provider of employment. Along with the big capital Budget for the railways, and a power programme that focuses on clearing up demand bottlenecks, the overall infrastructure sector has got due attention.
o·nus
Used to refer
to something that is one's duty or responsibility.
down·trod·den
Oppressed or
treated badly by people in power.
vul·ner·a·ble
Susceptible to
physical or emotional attack or harm.
on·er·ous
(of a task,
duty, or responsibility) involving an amount of effort and difficulty that is
oppressively burdensome.
com·mend·a·ble
Deserving
praise.
com·pli·ment
Politely
congratulate or praise (someone) for something.
bottlenecks
problem or weakness
INDIAN EXPRESS: Less white
#OscarsSoWhite
redeemed itself Sunday night, washing away several sins by letting host
Chris Rock take on its “lack of diversity” head-on, by picking a newspaper
investigation for Best Picture over space exploration, by honouring a Mexican
director for the second time in a row (it happens rarely) for a slice of Native
American history, and even finally giving an acting award to Leonardo DiCaprio
— righting one of those wrongs that no one ever forgets.
The Academy of
Motion Picture Arts and Sciences also silenced criticism that it ignores
popular, hit films for obscure ones that “no one ever saw”. The film that had
the best night at the Oscars was Mad Max: Fury Road, the unapologetic George
Miller entertainer that wowed audiences and critics alike. However, the equally
loved and feted The Martian was swamped in the process, with its director,
Ridley Scott, snubbed again. A question of unfortunate timing, perhaps, with
the pathbreaking film releasing too early in the year for the notoriously
fickle Academy memory. If it’s any consolation, America’s long-lasting love
affair with Star Wars didn’t help The Force Awakens either to any of its
handful of technical awards.
Rock’s diversity
message, driven home in a 10-minute introduction and in parodies which featured
him and Whoopi Goldberg, among others, as characters in hits of the year,
wasn’t the only hot-button topic that made it to the ceremony.
Vice-President Joe
Biden made an appearance to talk about campus sexual violence while DiCaprio
gave a rather dull and earnest speech about climate change (the only one with
tears in eyes was friend Kate Winslet, and they have a Titanic together). Andy
Serkis’s comparison of Donald Trump to a “planet-threatening megalomaniacal
monster” went further.
At the same time,
the ugly presidential election found little mention. However, The Revenant has
been compared to Trump and The Spotlight to Hillary Clinton. With the honours
equally divided between the two films, it serves well to remember that The
Revenant belongs to “Mexican” Alejandro González Iñárritu. The Best Director
winner hoped for a world where “for once and forever the colour of skin becomes
as irrelevant as the length of our hair”.
wow
Impress and
excite (someone) greatly.
swamp
Overwhelm or
flood with water.
snub
Rebuff,
ignore, or spurn disdainfully.
notoriously
To a notorious
degree; "European emigres, who notoriously used to repair to the British
Museum to write seditious pamphlets
fick·le
Changing
frequently, especially as regards one's loyalties, interests, or affection.
megalomaniacal
Suffering from
megalomania
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