New Delhi: On Monday, Atanu Chakraborty, Secretary, Department of Economic Affairs, said that the government’s present borrowing plan for this fiscal year is only in rupee-denominated bonds, implicitly ruling out, for the time being, sovereign bond issuances in external currencies announced in the budget.
It was a proposal that had invited much criticism, including from affiliates of the RSS, and its reversal didn’t come as much of a surprise. But it was also not the first of the many announcements Finance Minister Nirmala Sitharaman made in her maiden budget in July that has been rolled back.
A series of announcements and decisions that have sought to tackle the economic slowdown and revive growth have undone some significant moves made in the budget and forced analysts to say that Sitharaman’s first budget has largely unravelled within three months of being presented.
For instance, Sitharaman announced a historic cut in corporate tax rates — but outside of the budget. She slashed the effective corporate taxes to as low as 25 per cent for all firms and to 17 per cent for new firms in the manufacturing sector. The changes, however, were brought about through an ordinance rather than through the Finance Act route.
Besides the sovereign bond issuance, the government withdrew the super rich surcharge for foreign portfolio investors that had increased their effective tax to more than 42 per cent. The announcement in the budget saw the stock markets tank and the government receiving a lot of representation from foreign investors.
The government removed this levy also through an ordinance.
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‘Not unusual except for tax changes’
Changes to the original budget announcements are not a rarity but they typically happen before the Finance Bill gets the Parliament nod. This time around, however, most of the changes have happened well after the enactment of the Finance Act for 2019.
To be sure, this time, the time frame between the presentation of the budget and its passage was also less than a month on account of elections as against nearly two months in a non-election year.
“There have been many changes since the budget but there have been such instances in the past as well. But what is unusual is the tax changes that have been made through an ordinance,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy.
“When budget was prepared, there was not much time for the new finance minister as she had just taken charge. Besides, a lot of bad news on the economy front came out after the budget was finalised,” Bhanumurthy said, adding that both the central bank and the Modi government were taken aback by the 5 per cent GDP growth for the quarter ended June.
“Public policy need not wait for the next budget and in that sense, the finance ministry seems to be more pragmatic now by trying to address the challenges when it comes to growth,” he added.
Some budget announcements may not be implemented
Besides these measures, some of the other budget announcements may also not be implemented.
For instance, the budget talked about the government asking the capital markets regulator — the Securities Exchange Board of India — to increase the public shareholding limit in listed companies, or the percentage of shares held by the public, to 35 per cent from the current 25 per cent.
SEBI has since not found any merit in the implementation of the proposal, especially since many state-run firms are yet to adhere even to the existing public shareholding norm of 25 per cent.
Another proposal in the budget, that of zero budget farming, may also not see the light of the day.
Sitharaman had claimed that the proposal could help in doubling farmers’ income but scientists had questioned the viability of such a move. The government itself doesn’t expect the scheme to be rolled out in the next few years.
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It was Not her budget. It was Jaitley budget given to PM and he gave it to her. Wanna bet??????
Actually it was announced in the budget speech of Mrs Seetharaman that government will take external debts , to increase liquidity in the financial system. That means the funds with banks will be used for giving loans to local industries and MSME sector . If government takes loan by bonds , the lendable funds will shrink .
PM Mr Modi may have the charisma to win the heart of the many in our Country , but the one area that Mr. Modi failed is stable and progressive Economy , with stable development in industry , employment and human resources , utter and complete failure since 2014 , the moment late Mr. Jaitley was appointed as Minister of Finance , India’s Economy was doomed , Mr. Modi himself is dictatorial by nature , and does not tolerate anyone’s interference in his personal decisions , ofcourse it does not help that most of his personal secretaries , cabinet ministers assistants are all Yes Men and Cover your Asses type , who stick to their posts with false praises and pretences of PM Mr Modi , so by the time Mr Modi finishes ruling , India will be in Economic ruins .
Nothing wrong .. now personal tax reduction
Say Upto 50000 pm nil tax and 50000 to 100000 pm only 5% with max of 20% and GST rates reduction and rationalization is badly required
No one except the government was surprised by the weakness in the economy. 2. Recall the breezy Budget speech, even basic numbers were missing. So nothing is lost by undoing wrong moves / decisions. 3. Whether the government has the will to get the economy back on track, which is impossible without structural reforms, is still not clear. How long the political winning streak can survive such dismal economic performance is what many are wondering.
Prof Lauence Peters, as Management and behavioural Expert of yesteryears had written a book titled “Peter’s Principles”. Generally, this book propounded the view that in every organisation, people grow from below until they reach their level of incompetence. That is, the level at which they can no longer discharge their duty competently. So that they cannot grow beyond to shoulder higher responsible. For Smt. Nirmala Sitaraman, becoming the FM was reaching her level of incompetence. That the new government did not have enough time to prepare the budget is hogwash. The Government has an army of bureaucrats and experts to do the job. FM does not personally prepare the budget. Anyway, the Union Budget of 2019 has become an Absurd Drama of the era of Bertold Brecht.