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A few points on today’s budget. Just some thoughts, in no particular order.
Today’s budget marked an important departure from the government’s thought process of taxing and spending. Taxes are a byproduct of activity, not activity in itself, so it’s a welcome development.
The government did not shy away from spending. This also is an important change, and while some groundwork was laid down in the eco survey, the spending commitments are large and growth supporting
After a long time, India’s revenue projections appear conservative (on face value). While people obsess over divestment proceeds, the tax projections for both years May end up surprising upwards if growth cyclically does well (it should)
The surprise jump in deficit is partly linked to transparency initiatives that needs to be welcomed. In the spirit of more information sharing, a kitchen sinking of deficit forecasts is necessary and welcome. This makes projections more reliable
A lot of changes announced on infra spending is welcome and necessary. The proposal for greater mkt access for new innovative funding vehicles is fantastic, and I hope the government focuses on reducing their cost of borrowing also (through sovereign issuances etc)
A couple of things that need to be done going forward?
India needs a better GST. By taxing a small set of goods and services, we are not only collecting less, but also encouraging evasion. A lower rate in high single digits is what we need to go for eventually.
India needs a better GST. By taxing a small set of goods and services, we are not only collecting less, but also encouraging evasion. A lower rate in high single digits is what we need to go for eventually.
India also needs to do more define income properly. Our tax system still needs a lot of reform. For a country where 90% of direct taxes are paid upfront (TDS, adv tax filings, normal filing) India’s tax collection cost is too high. A no screening rule for 2 years can be tried.
A final point (more like a pet peeve) is that we need to make events like budget less relevant and noisy.
That can happen when predictability of tax regime is high, which should hopefully become the guiding principle in coming years
That can happen when predictability of tax regime is high, which should hopefully become the guiding principle in coming years
