Budget Expectations 2009

        The Budget 2009 should ensure stability and continuity in the budget-making and reform process. Brief Budget expectations are :

 

        1. Don't tinker with the tax rates and retain stable rates as far as possible to facilitate planning by the taxed assessees. Frequent, unnecessary changes in rates had made micro-level planning go haywire

 

        2. Raise basic income-tax exemption limit to at least Rs.2 lakhs to provide for fall in value of money. Also, introduce the exemption limit on a proportional basis instead of the fixed Rs.1 lakh as a measure of equity and fair play.

        

         3. Exempt interest on bank fixed deposits up to, say, a sum of Rs.10 lakhs for all individuals as measures of support for bank deposit mobilisation and for individuals for arresting erosion in value of money.

         

          4. Discontinue FBT which proved inefficient. Reduce service tax and clearly define "input service" like essential link services and taxable service of renting of immoval property.

 

          5. Don't reintroduce Investment Allowance which will destabilise the settled structure. Not to have further subsidies and concessions but ensure effectiveness in their administration, especially in targeting.

 

          6. Don't encourage banks to be long-term lenders. Let term-financing institutions like IDFC, IIDFC etc. function as consortium lenders for infrastructure development, as was being done for industrial lending up to the mid-nineties; and a part of bank deposits be set aside for participation through a well- and quickly-designed mechanism. Coordinated lending in infrastructure is crucial for all-round effectiveness.

 

          7. Encourage and devise effective schemes, through the existing agencies/institutions, to utilise local manpower and material resources in the social and rural infrastructure sector.  Encourage NGOs, social organisations and institutions in associating with rural development work. Support packages of benefits to tackle malnutrition problems, especially for women, children and students.

 

          8. Hasten PSU disinvestment on fast track to eliminate the internationally embarrassing budget deficit, the creation of which had originated with initial industrialisation. Better repay the debt so incurred. Don't forget to recognise the correlation subsisting in investing the hard-saved money in the past to initiate and nurture self-reliant industrialisation, but for which  globalisation would have devoured the Indian economy.

 

                                                DR. K. U. MADA

Mumbai : 22 June 2009

 

Profile : Dr. K.U. Mada, Economist & Development Banker.

            Former Executive Director, erstwhile I.D.B.I.and

            chief, IRBI, for shortwhile.

            Ph.D.(Economics), Has been Director of

            companies over 30 years, faculty-member,

            speaker and commentator.