Chaivala Rural Budget Rocks and Knocks Opposition

Though ‘Loot ki Sarkar of UPA’ was defeated by Modi, Modi’s sarkar was accused by Rahul as ‘Suit boot ki Sarkar’ because  Modi had appeared with a costly suit gifted to him by an Industrialist a year or so. Now, with the budget of 2016-17 which is being hailed as the Pro-Farmer, Pro-Poor, Pro-Women, Pro-Rural Skill and Infrastructure Developments budget, it seems that Congress Party under Rahul’s stewardship  was once again knocked out and he should coin some other suitable slogans to target Modi. 

Some salient points of the budget in respect of Rural and Agricultural Sectors alone are listed hereunder:

vA dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of  Rs. 20,000 crore with a view to double farm incomes by 2022.

vA sum of Rs 38,500 crore allocated for MGNREGS.

v 100% village electrification by 1st May, 2018.

v 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission

v Rs.2,000 crore allocated for initial cost of providing LPG connections to BPL families.

vNew health protection scheme will provide health cover up to Rs. One lakh per family. For senior citizens an additional top-up package up to Rs 30,000 will be provided.

vProgramme for sustainable management of ground water resources with an estimated cost of  Rs.6,000 crore will be implemented through 3 multilateral funding

v5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up under MGNREGA

vSoil Health Card scheme will cover all 14 crore farm holdings by March 2017.

v2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years.

vUnified Agricultural Marketing e-Platform to provide a common e- market platform for wholesale markets

vAllocation under Pradhan Mantri Gram Sadak Yojana increased to Rs. 19,000 crore. Will connect remaining 65,000 eligible habitations by 2019.

vTo reduce the burden of loan repayment on farmers, a provision of  Rs. 15,000 crore has been made in the BE 2016-17 towards interest subvention

vAllocation under Prime Minister Fasal Bima Yojana Rs 5,500 crore.

vRs 850 crore for four dairying projects - ‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenous breeds.

Two major failures of this budget cannot be ignored.

1.Modi Sarkar could not bring back black money from the domestic Indians on a war footing so far – not to speak about the black money held by the Indian Citizens abroad.  To bring back local black money,  this budget has given them time to declare undisclosed income by paying tax at 30% plus surcharge at 7.5% and penalty at 7.5% with a clause that such declarants will have immunity from prosecution.  These provisions year after year in every budget need to be stopped and no more leniencies should be shown hereafter. At least, if this warning is incorporated in this budget, one can realize the real intent of the present government and the honest tax payers will trust the government while paying taxes. 

2. Though the salaried employees are given some relief by raising tax rebate under Section 87A of IT Act to Rs.5,000 from Rs.2000 for individuals with income less than Rs.5 lacs and also by raising the limit of deduction of house rent paid under section 80GG to Rs.60,000 from Rs.24,000 to those living in rented houses, this budget’s proposed taxing of 60% of withdrawal from our EPF on contribution made after 1-4-2016 is draconian to say the least. Right now, EPF is 100% tax-free because it is an exempt-exempt-exempt or EEE product, which means it is exempt from tax at all three stages of investing, accumulation and withdrawal.

 Due to massive opposition from the affected people, PMO is all set to roll back this measure. But, it is really sad that conflicting statements were issued by the Finance Ministry, Deputy Finance Minister and even Finance Minister himself.

Originally it was said as a tax on 60% on the entire withdrawable amount, but, due to opposition to this measure, it was clarified that only interest portion is taxable. Finance Minister’s clarifications  were also equally not convincing  but rather confusing. The explanations of our ingenious FM that “If invested in Annuity Scheme, 60% withdrawals will not be taxed and he will be getting regular pension and the intention behind the move is to make India more insured and pensioned society” are cunning to say the least. Because such taxation is akin to double tax or treble tax and it is the prerogative of the employee to use the fund as he wishes at the time of retirement – whether to spend or invest - and to lure him or threatening him with such tax to invest in certain schemes to avoid tax is simply interfering with his fundamental right of decision  making.  

The Finance Ministry explained that this tax measure is said to bring National Pension System (NPS) and Employees Provident Fund (EPF) on same pedestal and also to curb rich executives from misusing the EPF route for tax avoidance, as out of 3.70 crore active EPF accounts, around 3 crore belong to those who earn less than Rs.15000 a month, a statutory limit for compulsory EPF contributions at the rate of 24 % of salary and the remaining 70 lacs high income people joining EPF on a voluntary basis needs to be treated differently.  The Finance Minister said that we see this not as a revenue item but as a welfare measure. Now, it is revealed that neither the Labour Ministry nor the Employees’ Provident Fund Organization (EPFO) were consulted in the pre-budget meetings and it seems that it is the brain child of our Finance Minister.

Any amount saved during the service by any employee – whether drawing a huge salary or minimum statutory salary and kept in the PF account after payment of taxes, any further tax is unfair and it is all the more disgusting to see the Government putting forth the argument that 70 lacs rich PF contributions are taxed only to prevent misuse of tax avoidance.  While the Government is willing to extend its amnesty measures to unearth black money with soft taxes, they are looking honest rich persons with suspicions. Again in 70 lacs accounts, whether the Finance Ministry feels that all these account holders are rich – as there will be more account holders drawing salaries just above Rs.15000 – upto Rs.50,000 etc. and label them as ‘bad and black money holders’ is really unethical and we do not relish such statements from the Government side.

While Modi wants to trust people at large – whether poor – moderate – rich in his dealings – with self attestation – pass port without police verification on the strength of self declaration etc., some are still in the old mind set which is not in tune with the Modi’s Idea of India. 

Readers may feel that this is a very trivial one and to be ignored.

With the immediate intervention of PMO there is every possibility of complete roll back of the tax or modifications in tune with the protests raised by the salaried class and its affiliated unions and even the Labour Ministry and hence the readers may accuse E-Touch that the issue is being overblown.  But, the way in which the issue was handled is unbecoming of a matured and level headed Finance Ministry leading to the course correction and hence this detailed analysis.  

But, this will not belittle the Budget which is a Path Breaking and Dream Budget . On the whole, the budget is rated by most of the elite economics  at 7 points on the 10 points scale. Yes, Modi had passed the budget examination. The budget can be termed as Fair and Love one and definitely not a cosmetic touch budget of ‘Fair and Lovely’ as portrayed by Rahul Gandhi.  Again Chaivala’s Jai Kisan Budget is rocking and knocking opposition down to a pathetic level literally and electorally.  Party Politics is ok, but, not Petty Politics as being demonstrated by opposition parties - Congress Party in particular – read Rahul. Rahul new jibe  of ‘Fair and Lovely’ in the Lok Sabha can boomerang  like his earlier jibe of ‘Suit Boot Ki Sarkar’.  ‘Fair’ is normally equated with upper layer of economic class – and not with SC/ST/OBC classes and his new found jibe for ‘Fair’ may, in all probabilities, not be welcomed by the lower economic classes. Anyhow, only electorates are the masters who can judge and vote. 

THINK INDIA THINK.