The budget for the financial year 2021-22 was presented on 1st February by the honorable finance minister Nirmala Sitharaman. The budget presented by the finance minister evoked varied responses from different sections of the society. Here is a breaking down of the budget 2021-22.
Again, this financial year, the budget proposed to include rs 70,000 crore of capital infusion to boost credit in the Public Sector Banks. The bad loan crisis of India is a pressing problem of the decade and the government’s reluctantly sheepish attitude does not help ease the problem. Each year the government can be found announcing capital infusion in banks to dilute its bad loan crisis but never is a solution drafted to help eradicate the tricky problem.
The finance minister declared that the government would consider raising minimum public shareholding in the listed firms to 35% from 25% at present. Analysts state that many MNCs listed on Indian Bourses may consider delisting after this, if increase shareholding is implemented.
The budget proved to be a big turn off for the defense expenditure. When India is amid bitter standoffs and high security risks at the moment, no specific mention of the forces or defence came across as a big damp squib.
Last year it was declared that India was suffering from its worst employment crisis as the unemployment was the highest in 45 years. As the economy showed signs of contracting even before the pandemic struck, the job market woes only exacerbated with the stringent lockdowns. In such horrendous circumstances , the job sector had soring expectations from the budget. Sitharaman’s budget immensely disappointed one and all as no move whatsoever was announced to ease India’s biggest crisis.
With an aim of phased corporate taxes reduction plan, the budget proposed to include only the companies with an annual turnover of up Rs. 400 crores, displacing the earlier cap which included companies with annual turnover of Rs. 250 crore. The move has come under fire, as many analysts firmly believe that the tax should have been applicable to all and not just a selected few. It does not bear well for the government that has been promising for the same for the last 5 years and ends up not delivering it in the 6th year as well.
If you are rich and had high exceptions, you are not in just for disappointment but also a blow. Nirmala Sitharaman shunned the wealth tax but in return increased the surcharge for the rich. It was proposed to increase the surcharge to 3% for those earning Rs. 2-5 crore and to 7% for those earning above Rs 5 crore. Aiyar, Indian politician and former career civil servant states “the government is increasingly making the economy uncompetitive with neighbors with high levels of corporate tax and income tax. Expect more Indians to disappear to low tax land”.
This comes across as a valid argument as taxing the rich higher would provide disincentive to the rich to invest. this can have serious repercussions for the battered economy that is in dire need of investment, to get the economy moving.
If you own a car or a bike, you are in for disappointment too. In a blow to owners of two or four wheelers, the budget proposed to increase Special additional Excise Duty and road and infrastructure chess each by one rupee a liter on diesel and petrol.
As for what went costlier, the list includes compressors for refrigerators and air conditioners, lED lamps, raw silk and cotton, automobile parts, mobile phone parts, leather products and nylon fiber and yarn. As the hike in customers duty will lead to the refrigerators, AC, LED lights and mobile phones being more expensive, it has its adverse impact on the consumer spending.
Where the government needed budget which could have incentivized spending, the Indian government on the contrary presented a budget that quashes or subdues spending.
The disinvestment approach is vehemently incorporated by the government in the budget for the FY 2021. The finance minister announced plans to privatize 2 public sector banks. this will bring the long awaited LIC IPO (initial public offerings) in FY 2022. This will prove to finance the government’s rampant and increased investment that has to be initiated for the FY 2022 to revive the economy. This is deplorable as the tax on the “sin goods” could have contributed to the government’s finances. In fact no mention was made of the tax on the cigarette and narcotics, which was highly expected.
By now, the middle-class consumers in India must have noted that the budget has not been set keeping them in mind. To add to the list of their woes, the interest earned by the provident fund that contributes above Rs. 2.5 lakh a year will now be taxed at the nominal rate. No changes in the income tax slab to benefit the common man were noted. The only relief that the budget included was that people aged over 75 years need not file IT returns.
Another contentious inclusion in the budget includes, decreased food subsidies and lower allocation of MANREGA. This raises big questions on government’s stand on the welfare of the common man, poverty eradication and rural development