By Ajit Ranade, Mumbai Mirror | Feb 21, 2015, 12.00 AM IST
Union Finance Minister Arun Jaitley will present the budget on February 28
Some not so radical ideas for the Finance Minister to consider for next week's Union budget.
The most watched television event that is not an India Pakistan cricket match is the Union budget speech. Given by the Finance Minister (FM), it will start at 11 AM next Saturday. By now, you have read about all the expectations piled up on the FM's shoulders. The stock market is going a bit crazy (as always).
India is touted to become the fastest growing economy next year, even ahead of China. To add to the boisterousness, here is a wacky wish list. There is a good chance that none of these wishes will be granted, but it's worth flying akite, anyway. So here goes:
(A) Can we start taxing agricultural income?
Sure, most of the poverty in India is confined to rural areas, and in agriculture. But there are many rich farmers too. If you look at the crorepatis in Parliament, many of them describe their occupation as agriculturist. In fact many do not even report a Permanent Account Number, implying that they do not pay income tax. Presumably, if all their income is from farming, then they don't pay any income tax. But the time has come to examine this. Shouldn't we address this holy cow? Sure, this will need a constitutional amendment. But since 14 per cent of national income is from agriculture, we can't let that entire amount remain untaxed.
(B) Can we introduce Demat Gold, a la Kisan Vikas Patra (KVP)? You can buy KVP from any post office or retail outlets. Imagine if you could buy a piece of paper called Demat Gold (DG) for Rs 5,000. This is equivalent to 2 grams of gold. You can redeem it any day, and get back money equal to that day's price of 2 grams of gold. So it is as if the DG is like actual gold, except that it isn't. You can't convert it into a necklace, but it protects you from inflation. Since it is paper, it is much simpler to administer, as compared to a physical gold deposit scheme. It is alsi gold, and maybe we can persuade Mr. Amitabh Bachchan to be its brand ambassador. If this DG scheme succeeds, it can potentially reduce gold imports by 20 per cent, thereby saving 10 billion dollars (60,000 crore rupees) in foreign exchange.
(C) Can we make Aadhaar compulsory for all subsidy payments?
The total amount given out in subsidies is more than Rs 2.5 lakh crore. Except for cooking gas subsidy, which is now linked to a bank account, the remaining is not explicitly targeted. We spend close to Rs 1 lakh crore on fertiliser subsidy. This is presumably to help poor farmers, but most of it gets cornered by rich states like Punjab and Haryana. In fact fertiliser usage is very low in eastern states like Bihar and Orissa. Can we not explore payment of fertiliser subsidy into the bank account of the farmer directly? After all, 99 per cent of households in the country have a bank account, thanks to Jan Dhan Yojana. By a combination of Aadhaar and JDY we should be able to target subsidies better.
(D) Can we introduce a carbon tax?
Thirteen of the 20 most polluted cities in the world are in India. This is mostly because of vehicular pollution, congested traffic, idling engines and subsidised diesel. The harmful fumes are inhaled by slum dwelling babies on the roadside, which permanently damages their brain, and their future earning prospects. Delhi is the worst, despite a ban on diesel in public vehicles. The time has come to impose a carbon tax, so we at least pay the price of polluting the atmosphere with vehicular fuel.
(E) Can we make interest income tax free, just like dividends from companies? If not fully, at least up to a limit of Rs 50,000? This will encourage more savings, and more utilization of the banking channel.
Wishing the FM a super Saturday... and you all a stress free budget.
