India’s economic muscle was put on show on Feb 29 when the FM declared India’s largest ever loan waiver to the debt-ridden farmers. The $15 billion (or Rs.60,000 crore) one-time debt forgiveness program is one of the largest in the world.
Indeed the FM and the UPA government will go down in the history of the nation for showing the courage to undertake this massive loan waiver. But there have been quite a few discordant notes that did not like it.
Late in the evening on budget day CNBC TV-18 was showing one of the numerous programs, and in that particular one I watched, the host Raghav Behl sounded ominous as to how this unprecedented dole could be sustained since the ‘ratios’ he calculated looked pretty grim.
To this poser the CPM MP Sitaram Yechury retorted, “Is the budget aimed to satisfy your calculations, or is it also for the millions of have-nots to have some succor?”
The tenor of the budget is very clear. It lays stress on typically letting the money of the lesser privileged churn out more for them than pleasing the big industrialists who have the wherewithal to extract advantages from the government.
For example, the income tax savings for most people would be between Rs.300 and more than Rs.4000 every month. This extra cash, the FM hopes, can then find way to more purchases since many items can cost less because of softening of excise duties.
As if to prove that true, carmakers like Maruti and Hyundai have cut the prices of the low-end models no sooner the budget was announced.
There are many pluses in the budget. Short term capital gains will be taxed 50% more than what it has been (10% to 15%) thus far. It will help in curbing excess speculation and bring some semblance of order in the highly volatile stock market.
Small service providers will not pay service tax before crossing the threshold of Rs.10 lakhs. There is good news for those who plan to reverse-mortgage their dwellings, mostly the elderly people. The transfer of house in such cases will not face capital gains tax, and the loans received will also be freed from income tax.
Among the political class, especially the Congress, the mood is clearly upbeat. The breathtaking agricultural loan-waiving is perhaps the clearest indication that the elections are not very far. The only question that remains is ‘when’.
Meanwhile, take a look at the various headlines yesterday in the video below.