I eagerly watched 08-09 budget this year and in some sense there was no surprise in it.
The farmer loan waiver was widely expected. What was really interesting was the fact that government wants to complete the waiver by June 08 .Considering the fact that elections are not possible during monsoon season , it seems that with all probability elections are due in September - October 08 . This will also be a period short enough to milk the loan waiver to farmers - the feel good factor. I also think that this move was planned much in advance with an eye on elections . The hard work was done in last few years .Of course ever government consciously works in first 3-4 years to give something substantial and visible in the late years of it's governance. This tactic is not new. I feel the execution has been done very well by this government . No doubt congress feels that they have given death blow to the opposition's electoral chances with the waiver.
I liked the approach of tackling ( the so called) slowdown by stimulating consumption through reduction in direct taxes and sales tax. The sixth pay commission bonanza will be an extra .This along will relief to farmers will also put more money in the hands of people what'll further give Phillip to consumption. However rapid interest rate cut will be difficult as a result.
The tax buoyancy in last three years has been remarkable - about 40% annually. The Tax-GDP ratio however is still very poor at about 13%. There are countries in the world where the ratio is as high as 50% .I however feel that the ratio should be in the range of 25-30% for India if taxes are paid properly. The only solution to this tax evasion is heavy dose of IT( information technology) for tax administration . The introduction of GST will also help simplify the system .But all these measures take time and the government is conscious of this fact.
If this tax buoyancy continues for the next two three years then I believe the government should be in a position to provide substantial form of social security like guaranteed annual income to the farmers , something like minimum salary of say 5000 per year to start with. This'll go a long way in preventing the human tragedy that has unfolded in the past few years in the rural hinterland of the country.
The farmer loan waiver was widely expected. What was really interesting was the fact that government wants to complete the waiver by June 08 .Considering the fact that elections are not possible during monsoon season , it seems that with all probability elections are due in September - October 08 . This will also be a period short enough to milk the loan waiver to farmers - the feel good factor. I also think that this move was planned much in advance with an eye on elections . The hard work was done in last few years .Of course ever government consciously works in first 3-4 years to give something substantial and visible in the late years of it's governance. This tactic is not new. I feel the execution has been done very well by this government . No doubt congress feels that they have given death blow to the opposition's electoral chances with the waiver.
I liked the approach of tackling ( the so called) slowdown by stimulating consumption through reduction in direct taxes and sales tax. The sixth pay commission bonanza will be an extra .This along will relief to farmers will also put more money in the hands of people what'll further give Phillip to consumption. However rapid interest rate cut will be difficult as a result.
The tax buoyancy in last three years has been remarkable - about 40% annually. The Tax-GDP ratio however is still very poor at about 13%. There are countries in the world where the ratio is as high as 50% .I however feel that the ratio should be in the range of 25-30% for India if taxes are paid properly. The only solution to this tax evasion is heavy dose of IT( information technology) for tax administration . The introduction of GST will also help simplify the system .But all these measures take time and the government is conscious of this fact.
If this tax buoyancy continues for the next two three years then I believe the government should be in a position to provide substantial form of social security like guaranteed annual income to the farmers , something like minimum salary of say 5000 per year to start with. This'll go a long way in preventing the human tragedy that has unfolded in the past few years in the rural hinterland of the country.
