The shoe costs less but bites just the same

Chidambaram’s 8th budget looked like a work in progress

kumar-deep-banerjee

Kumar Deep Banerjee | February 28, 2013



Budget 2013-14, as many pundits, economists and TV commentators will say, is a pragmatic approach to growth.

However, some figures are difficult to comprehend: for example, where will the extra money outlined in the plan expenditure come from when additional tax mop-up, both direct and indirect, is only a fraction of the proposed increase?

Moreover, the budget speech had no mention on the disinvestment target or even a mention on the sale of spectrum.

One clear indication from the budget is that Chidambaram is going extra mile to attract foreign investors to come and pump money, as the definitions of FDI and FII categories have been simplified.

The finance minister has also proposed tax laws to bring clarity, stable tax regime, non-adversarial tax administration, fair mechanism for dispute resolution, and an independent judiciary.
While all of this would be music for most global investors, the way forward can be defined by the various committees that may be formed for amicable dispute resolution and perhaps the cabinet's course on tax disputes like that of Vodafone.

After all, Budget 2013-14, contrary to the popular opinion, was also an exercise in undoing Budget 2012-13 in terms of rubbing investors the wrong way.

Industry body CII has welcomed the budget indicators on introducing provisions of general anti-avoidance rules (GAAR) from 2016 and steps taken to establish a tax authority.
Meanwhile, experts have already started sympathising with Chidambaram, saying that there was little scope left for him after Pranab Mukherjee’s budget last year.

Overall while buying a house costing above Rs 50 lakh may cost more, first-time home buyers may get concessions for houses worth less than below Rs 25 lakh. Buying a mobile phone and SUV (not in the same bracket) will cost more and  the super-wealthy need to pay more tax (there are only about 43,000 crorepatis in India according to government figures)

While one has to read the whole document closely to zero in on the devils in the details, most of the budget looked like a work in progress.
 

 

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