Thursday, September 1, 2005

The Budget and Me

The Budget and Me
By Narendra Luther
There are so many types of budgets - the householders' budget, the municipal budget, the budget of the State government, and the budget of the Union government. There are only two budgets that are important – the householders' and that of the union Government. Since the former is no one's concern except that of the individual concerned, we will talk only about the Union budget.

This budget comes regularly once a year – sometimes twice, like this time. It is a lot of work for the Finance Minister who has to read it standing without break for as long as the script demands. So far all Finance Ministers have managed to manage that level of that stamina. There must be something nourishing about the preparation of the budget that it enables even old men to live up to the rigour of its presentation. May be it is the knowledge that the whole nation is watching you.

The Great Show

I don't get excited about the budget. But a lot of sensexible people do. They sit round in big halls and see its delivery on a big screen. Not only the delivery, but also the blows and hugs it contains. They let go their exclamations at intervals appropriately, especially if the camera happens to focus on them. Then they proceed to dissect it to see, and show to the viewers and the Finance Minister, what they think it Learned articles are written by experts to show how they will affect the lives of people in the country. For the fist half of my life, I did not understand the budget and so I did not care. For the second, I began to understand it and so I did not care. The portion that interests me is the exemption limit of income tax. The rest I leave to experts – and I have many friends amongst them.

But honestly, there are a few points that I still don’t understand. There is no harm in admitting them. Let me tell you about some of them. One thing is how government can run with fiscal deficits year after year. Dear reader, tell me as an individual, how long can you live that sort of life without falling foul of law. But nothing happens to government.


Second, while the limit of exempted income is raised, a surcharge is slapped in the name of education cess. That means the government is serious about education. But education will first have to be imparted to State governments. Otherwise there are likely to be more Kombakonams even in the non-Tamil parts of the country.

Thirdly, why is it that what is good for the country is not good for the Sensex? It first showed its unhappiness by loosening the bears. When it did not frighten the Finance Minister, they started an agitation. They were against the transaction tax. But has there been any levy - transaction or non-transaction that has not been passed on to the consumer in some form or the other?

I am not going to tell you about the fourth, fifth, sixth and seventh points that I don’t understand because it will contradict my earlier claim that I began to understand the budget in the second part of my life. I should not have made that sort of boast and then proceeded to make admissions of my enormous ignorance. But believe me, the candid admissions that I had begun to make were done in the genuine belief that you would not believe me. But some of you may. That will affect my credibility and nothing is worse than that. So, I shall let them pass and depend upon others to raise the remaining points, which might enlighten me also.

The 'Sarality' of the Form

My basic difficulty is to fill up my Income Tax form. Successive Finance Ministers have claimed to make the form saral and saraler. But the only thing saral about them is writing my name, my father’s name and my postal address. The assessment year is a year ahead of the financial year and I feel I am dealing with the future while I am only disclosing my past financial status. Though they say it is only one page, they don’t talk about the enclosures that you have to attach to it. So, I always go to a pundit friend of mine, and like the illiterate village woman who wants to get a letter written to her errant son or an absconding husband, pour my facts and papers before him and plead with him to give them a shape acceptable to my assessing officer. My predicament has become all the more galling after I returned recently form a trip to Saudi Arabia where there is no tax. Imagine, being told immediately that the last date for filing the returns is fast approaching. The Saudi Government can afford not to levy tax because its enormous reserves of oil are matched only by its sparse population. I suggest we emulate them. Let the Finance Minister invest more in exploration of oil reserves and give incentives for not producing children. He can, for example, give a rebate for the educational expenses of every unborn child. Anyway, these suggestions can be considered only in the future.

‘Roll –Backy’ FM

I have seen all Finance Ministers right since independence. I don’t think any one of them was roly-poly. They were all normal sized persons without much extra weight. But lately, our Finance Ministers have become, if I can coin a term, ‘roll-backy’. They introduced some brave measures in their budget. But when they saw the storm some of them raised in some powerful sections of the polity, they either withdrew them or modified them. The new term for that manoeuvre is ‘roll back’. I don’t think the term applies to the Finance Minister. That would appropriately be ‘somersault’. It applies to the measure which is withdrawn. ‘Withdrawal’ is not an elegant term. It has the connotatation of retreat, a defeat, bank deposits, and also of Vatsyayana. ‘Roll back’, on the other hand is undoing something that should not have been done in the first instance. Chidambram, the charming FM also did likewise on the transaction tax. The sensex jumped up with joy. Now people who matter are happy. Which means the country is happy. But wait a minute. It is not all over yet. There is an ally, which is supporting the government from the outside. It wants a number of roll backs, but will probably be satisfied with one. That is the reduction in the limit of direct foreign investment. That, they say, is dangerous. They remember from history that that flag follows trade. Though thee are many attractive flags in the world, they would like only the tricolour to fly in this rich land inhabited by the poor.