Finance Minister will
be busy in finalising the Union Budget’2013 to be presented on 28th
February’2013. There are really many challenges before him to address and present
a budget which will boost economic growth of the country. The GDP growth for
the year end 2013 is likely to be around 5.5% and all eyes are on union budget.
Not only we Indians but the world is also looking very closely to the
developments in India as this budget will decide the future course investment
in the economy of the country. Fiscal deficit and current account deficit are
the major concerns at present and overcoming people’s expectations is a big
challenge for the finance minister. Corporate world are also looking positively
that this budget will be pro growth and not a populist budget looking general
election in one year’s time.
Recently Government has also taken many steps to contain the deficit
including hike in diesel price and CNG prices. Now the diesel price is partly
decontrolled and diesel price is likely to be increased by 45
to 50 paisa every month. The Government also
collected a sum 12,000 crores by disinvestment of NTPC shares recently. But the
measures are not sufficed but want more doses from Government to speed up the
economic growth. Rupee has appreciated recently against dollar but the crude
oil price on the other hand is near to $ 95 per barrel. In this scenario
containing deficit will be a major challenge for the government. RBI has also
taken cautious approach and has reduced repo rate by 0.25% only.
Increasing service tax and excise duty will lead to dissatisfaction
across the class and may back fire Government. In my view Finance Minister look
into the following areas which can really help in increasing revenue and as
well as reducing the deficit.
1)
Focus on Wealth Tax :
The wealth tax act is totally
ignored in India and we have hardly seen any action based on wealth tax evasion.
There is news in the media that Finance Minister is considering the inheritance
tax as an option to increase the revenue but I think if wealth tax is reviewed
totally and actions are taken seriously then this can help a lot in increasing
the revenue. The basic limit of wealth tax exemption is 30 lakhs at present for
Individuals and needless to say lakhs of people will be having bank fixed
deposit or postal deposit more than 30 lakhs in India. Less than 3 crores
people file their Income Tax Return and I don’t think even 1% of this people
will be filing their wealth tax returns. Revenue collection has to come from
rich and ultra rich peoples and not from the poor and middle class family. I
request Finance Minister to make a new wealth tax law like done in income tax
by making Direct Tax Code.
2)
Promote Gold Deposit Scheme:
We are the largest
importer of gold across globe and this disturbs our balance of payment situation.
Government is keen to reduce the import of gold to overcome balance of payment crisis.
Government has month back increased import duty on gold from 4% to 6%. RBI
recently also allowed mutual fund Gold ETFs to invest part of the fund in gold
deposit scheme. Gold deposit scheme is one of the best avenues to invest in
gold for HNIs and is the only gold investment which pays interest to depositor.
I think Government has to aggressively promote gold deposit scheme and banks
are to be given targets to achieve the same. No bank talks about the scheme and
are not taking any step to promote gold deposit scheme. We all know a religious
charitable trust are having huge quantity of physical gold and is not used for
years. If the scheme is promoted and advertised aggressively then things may
change in coming years.
3)
Reduce Expenses:
It is difficult for
Government to reduce the subsidy burden over night as it has many political
implications and no party can take a risk when you have general election within
one year’s time. It is high time that Finance Minister must reduce the unwanted
expenditure of the Government to reduce the deficit. Government should also
make aggressive disinvestment plan next year to reduce the interest burden.
Increasing tax every
time will not solve the problem. You have to search for other areas either to
increase the revenue or to reduce the expenditure. I hope Finance Minister will
take this in to account while presenting his budget and not load more taxes on poor
and middle class family.
