- July 29, 2022
- Posted by: Ramkumar
- Category: Posts
My Review Of The Union Of India Budget
Yesterday, as the Government of India announced the 𝐔𝐧𝐢𝐨𝐧 𝐁𝐮𝐝𝐠𝐞𝐭, we had mixed reactions. Some of them termed it 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘀𝘁𝗶𝗰, while others complained that the budget focused more on growth than inflation and unemployment: immediate problems grappling the economy.
So i decided to look at the numbers myself on the government website.
1)This budget focuses on CAPEX than revenue expenditure – 19% on CAPEX against 16% last year. However, the 𝐆𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐧𝐞𝐞𝐝𝐬 𝐭𝐨 𝐩𝐫𝐨𝐯𝐢𝐝𝐞 𝐚 𝐫𝐨𝐚𝐝𝐦𝐚𝐩 𝐨𝐧 𝐡𝐨𝐰 𝐭𝐡𝐢𝐬 𝐂𝐀𝐏𝐄𝐗 𝐥𝐞𝐚𝐝𝐬 𝐭𝐨 𝐣𝐨𝐛 𝐜𝐫𝐞𝐚𝐭𝐢𝐨𝐧, 𝐥𝐨𝐰𝐞𝐫𝐬 𝐢𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧, 𝐚𝐧𝐝 𝐫𝐞𝐝𝐮𝐜𝐞𝐬 𝐢𝐧𝐩𝐮𝐭 𝐜𝐨𝐬𝐭𝐬 – 𝐞𝐬𝐩𝐞𝐜𝐢𝐚𝐥𝐥𝐲 𝐬𝐭𝐞𝐞𝐥, 𝐜𝐞𝐦𝐞𝐧𝐭, 𝐚𝐧𝐝 𝐨𝐢𝐥.
2)The big concern is that ~18% of expenses are towards 𝐝𝐞𝐛𝐭 𝐫𝐞𝐩𝐚𝐲𝐦𝐞𝐧𝐭𝐬 and may increase further if inflation increases and the rupee weakens against the dollar.
3)49% of the Government’s revenues come from taxes. 𝟭𝟱% 𝗰𝗼𝗺𝗲𝘀 𝗳𝗿𝗼𝗺 𝗜𝗻𝗰𝗼𝗺𝗲 𝘁𝗮𝘅𝗲𝘀, 𝟭𝟱% 𝗳𝗿𝗼𝗺 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝘁𝗮𝘅𝗲𝘀, 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗿𝗲𝗺𝗮𝗶𝗻𝗶𝗻𝗴 𝗳𝗿𝗼𝗺 𝗚𝗦𝗧. I believe 85-90% of income tax comes from the salaried middle class, and it is high time the 𝐆𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐢𝐧𝐜𝐥𝐮𝐝𝐞𝐬 𝐭𝐡𝐞 𝐚𝐠𝐫𝐢𝐜𝐮𝐥𝐭𝐮𝐫𝐚𝐥 𝐬𝐞𝐜𝐭𝐨𝐫 𝐢𝐧𝐜𝐨𝐦𝐞 𝐮𝐧𝐝𝐞𝐫 𝐢𝐧𝐜𝐨𝐦𝐞 𝐭𝐚𝐱.
𝗠𝘆 𝘃𝗶𝗲𝘄 𝗼𝗻 𝘁𝗵𝗲 𝗯𝘂𝗱𝗴𝗲𝘁:
1)The intent is good, but the GDP growth would depend on implementation.
2)𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐢𝐬 𝐬𝐭𝐢𝐥𝐥 𝐚 𝐜𝐨𝐧𝐜𝐞𝐫𝐧, especially when importing commodities for infrastructure investments.
3)It is high time that the Government broadens the income tax net; though the 𝗱𝗶𝗴𝗶𝘁𝗮𝗹 𝗰𝘂𝗿𝗿𝗲𝗻𝗰𝘆 𝗶𝘀 𝗮 𝗽𝗼𝘀𝗶𝘁𝗶𝘃𝗲 𝗺𝗼𝘃𝗲, we need to see actionable steps in the future.