On February 29, Finance Minister Arun Jaitley announced his nine pillars for transformation of the Indian economy. Here are nine weak links in his Budget itself. He will first need to fix them before he thinks of fixing the Indian economy:
1. The EPF fiasco: Provident fund savings are the backbone of the salaried middle class. The government has announced that these will be taxed. After a series of clarifications and further clarifications, it emerges that the tax proviso - on interest earned on 60 per cent of EPF - will kick in after April 1, 2016. Clarification for a clarification and now maybe another clarification!
This means that the younger you are, the worse off you will be.
In essence, it is dis-incentivising the PF scheme. The government says don't take the money out but put it in annuity plans - involving a kind of mutual fund that could be a mix of debt and equity - and get monthly returns. Being market-linked, the income will fluctuate.
What the government is doing is moving society towards a pension programme. But pension and PF are two distinct instruments. Why is the government merging them and not allowing people to choose? Is the real reason to fill government coffers by collecting more tax? At the end of a working life, this is an unkind cut for a salaried professional.This has never happened in the history of India. Retirement benefits have been bruised in a country where virtually no social safety net exists.
2. MGNREGA: The total allocation for 2016-17 is Rs 38,500 crore. The Finance Minister says this is the highest allocation ever. Well, in 2010, the allocation was Rs 40,100 crore. Also, in the past two years, the government has not even fully spent the MGNREGA budget. Given this track record, can we be confident of better results this year?
3. Doubling farmers' income in five years: The Finance Minister is vague on how this will be done. Maybe he needs to consult the states. In West Bengal, six million farmer families have seen their incomes go up by 75 per cent in the past four years. In contrast, the Finance Minister has allocated Rs 36,000 crore for 700 million people (those dependent on the farm and its income). That comes to Rs 1.50 per farmer per day. Does it make sense?
In fact, the fertiliser subsidy has come down by Rs 2,000 crore - from Rs 72,437 crore (revised estimates, 2015-16) to Rs 70,000 crore.
4. Public Sector Banks: RBI estimates in March 2015 claimed that a whopping Rs 4.3 lakh crore could be described as stressed assets and NPAs. This was all due to 39 borrowers, just 39. The government refuses to reveal the names of the defaulters or take action against them. The defaulters jet across the world.
In August 2015, the government announced a bailout of Rs. 70,000 crore over a period of four years under the Indradhanush Mission. Now another bailout of Rs 25,000 crore is being tried. Taxpayers' money will pay for 39 defaulter entities. And the banks will limp along.
5. PMGSY: Instead of the Centre now funding 100 per cent of rural roads, Delhi will fund only 60 per cent and the states 40 per cent. So in West Bengal, where Rs 3,000 crore was spent in 2015, the state government now has a burden of Rs 1,200 crore. Cooperative federalism?
Incidentally, for all the noise, PMGSY allocation has gone up by only four per cent - Rs 18,297 crore (revised estimates 2015-16) to Rs 19,000 crore (budget estimates 2016-17).
6. Oil price: The Indian basket of crude oil has crashed to an 11-year price low of $37.34 a barrel. The country is set to save Rs 2.14 lakh crore on its oil import bill alone in 2016-17. Every $1 per barrel change will mean an impact of half a million dollars for India!
Why are these savings not being reflected in higher social spending and increasing public investment?
7. Healthcare: In September 2014, West Bengal opened dialysis centres in as many as 34 hospitals. Yes, just in one month. In contrast, the union government says it will take care of the dialysis needs of patients in the country and improve their healthcare provision. But it has made life-saving drugs more expensive. In February, the government withdrew customs duty exemptions on 74 drugs including life-saving drugs to treat cancer, HIV and haemophilia. The Budget increases allocation for the National Health Mission by merely three per cent.
In West Bengal, I may add, 99 Fair Price Medicine Shops have been opened in just four years, providing medicines at 48-77 per cent below market prices. Discounts amounting to Rs 440 crore have been availed by 16 million people. Couldn't the savings from the oil bill be used for such truly life-changing missions?
8. FDI: A full 100 per cent FDI in marketing of food products produced in India has been allowed but the details are unclear. "Marketing" has not been defined and the distinction from FDI in multi-brand retail is vague. Deliberately vague? Should we smell something?
9. Education: For all its claims, the government has increased the Sarva Shiksha Abhiyan allocation by only Rs 500 crore, close to the price of a swanky bungalow in Lutyens' Delhi. Imagine, India's school education budget has gone up by a tiny 3.24 per cent. Are we not letting down our demographic dividend and our youngest citizens?
(Derek O'Brien is leader, Parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
On February 29, Finance Minister Arun Jaitley announced his nine pillars for transformation of the Indian economy. Here are nine weak links in his Budget itself. He will first need to fix them before he thinks of fixing the Indian economy:
1. The EPF fiasco: Provident fund savings are the backbone of the salaried middle class. The government has announced that these will be taxed. After a series of clarifications and further clarifications, it emerges that the tax proviso - on interest earned on 60 per cent of EPF - will kick in after April 1, 2016. Clarification for a clarification and now maybe another clarification!
This means that the younger you are, the worse off you will be.
In essence, it is dis-incentivising the PF scheme. The government says don't take the money out but put it in annuity plans - involving a kind of mutual fund that could be a mix of debt and equity - and get monthly returns. Being market-linked, the income will fluctuate.
What the government is doing is moving society towards a pension programme. But pension and PF are two distinct instruments. Why is the government merging them and not allowing people to choose? Is the real reason to fill government coffers by collecting more tax? At the end of a working life, this is an unkind cut for a salaried professional.This has never happened in the history of India. Retirement benefits have been bruised in a country where virtually no social safety net exists.
2. MGNREGA: The total allocation for 2016-17 is Rs 38,500 crore. The Finance Minister says this is the highest allocation ever. Well, in 2010, the allocation was Rs 40,100 crore. Also, in the past two years, the government has not even fully spent the MGNREGA budget. Given this track record, can we be confident of better results this year?
3. Doubling farmers' income in five years: The Finance Minister is vague on how this will be done. Maybe he needs to consult the states. In West Bengal, six million farmer families have seen their incomes go up by 75 per cent in the past four years. In contrast, the Finance Minister has allocated Rs 36,000 crore for 700 million people (those dependent on the farm and its income). That comes to Rs 1.50 per farmer per day. Does it make sense?
In fact, the fertiliser subsidy has come down by Rs 2,000 crore - from Rs 72,437 crore (revised estimates, 2015-16) to Rs 70,000 crore.
4. Public Sector Banks: RBI estimates in March 2015 claimed that a whopping Rs 4.3 lakh crore could be described as stressed assets and NPAs. This was all due to 39 borrowers, just 39. The government refuses to reveal the names of the defaulters or take action against them. The defaulters jet across the world.
In August 2015, the government announced a bailout of Rs. 70,000 crore over a period of four years under the Indradhanush Mission. Now another bailout of Rs 25,000 crore is being tried. Taxpayers' money will pay for 39 defaulter entities. And the banks will limp along.
5. PMGSY: Instead of the Centre now funding 100 per cent of rural roads, Delhi will fund only 60 per cent and the states 40 per cent. So in West Bengal, where Rs 3,000 crore was spent in 2015, the state government now has a burden of Rs 1,200 crore. Cooperative federalism?
Incidentally, for all the noise, PMGSY allocation has gone up by only four per cent - Rs 18,297 crore (revised estimates 2015-16) to Rs 19,000 crore (budget estimates 2016-17).
6. Oil price: The Indian basket of crude oil has crashed to an 11-year price low of $37.34 a barrel. The country is set to save Rs 2.14 lakh crore on its oil import bill alone in 2016-17. Every $1 per barrel change will mean an impact of half a million dollars for India!
Why are these savings not being reflected in higher social spending and increasing public investment?
7. Healthcare: In September 2014, West Bengal opened dialysis centres in as many as 34 hospitals. Yes, just in one month. In contrast, the union government says it will take care of the dialysis needs of patients in the country and improve their healthcare provision. But it has made life-saving drugs more expensive. In February, the government withdrew customs duty exemptions on 74 drugs including life-saving drugs to treat cancer, HIV and haemophilia. The Budget increases allocation for the National Health Mission by merely three per cent.
In West Bengal, I may add, 99 Fair Price Medicine Shops have been opened in just four years, providing medicines at 48-77 per cent below market prices. Discounts amounting to Rs 440 crore have been availed by 16 million people. Couldn't the savings from the oil bill be used for such truly life-changing missions?
8. FDI: A full 100 per cent FDI in marketing of food products produced in India has been allowed but the details are unclear. "Marketing" has not been defined and the distinction from FDI in multi-brand retail is vague. Deliberately vague? Should we smell something?
9. Education: For all its claims, the government has increased the Sarva Shiksha Abhiyan allocation by only Rs 500 crore, close to the price of a swanky bungalow in Lutyens' Delhi. Imagine, India's school education budget has gone up by a tiny 3.24 per cent. Are we not letting down our demographic dividend and our youngest citizens?
(Derek O'Brien is leader, Parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
On February 29, Finance Minister Arun Jaitley announced his nine pillars for transformation of the Indian economy. Here are nine weak links in his Budget itself. He will first need to fix them before he thinks of fixing the Indian economy:
1. The EPF fiasco: Provident fund savings are the backbone of the salaried middle class. The government has announced that these will be taxed. After a series of clarifications and further clarifications, it emerges that the tax proviso - on interest earned on 60 per cent of EPF - will kick in after April 1, 2016. Clarification for a clarification and now maybe another clarification!
This means that the younger you are, the worse off you will be.
In essence, it is dis-incentivising the PF scheme. The government says don't take the money out but put it in annuity plans - involving a kind of mutual fund that could be a mix of debt and equity - and get monthly returns. Being market-linked, the income will fluctuate.
What the government is doing is moving society towards a pension programme. But pension and PF are two distinct instruments. Why is the government merging them and not allowing people to choose? Is the real reason to fill government coffers by collecting more tax? At the end of a working life, this is an unkind cut for a salaried professional.This has never happened in the history of India. Retirement benefits have been bruised in a country where virtually no social safety net exists.
2. MGNREGA: The total allocation for 2016-17 is Rs 38,500 crore. The Finance Minister says this is the highest allocation ever. Well, in 2010, the allocation was Rs 40,100 crore. Also, in the past two years, the government has not even fully spent the MGNREGA budget. Given this track record, can we be confident of better results this year?
3. Doubling farmers' income in five years: The Finance Minister is vague on how this will be done. Maybe he needs to consult the states. In West Bengal, six million farmer families have seen their incomes go up by 75 per cent in the past four years. In contrast, the Finance Minister has allocated Rs 36,000 crore for 700 million people (those dependent on the farm and its income). That comes to Rs 1.50 per farmer per day. Does it make sense?
In fact, the fertiliser subsidy has come down by Rs 2,000 crore - from Rs 72,437 crore (revised estimates, 2015-16) to Rs 70,000 crore.
4. Public Sector Banks: RBI estimates in March 2015 claimed that a whopping Rs 4.3 lakh crore could be described as stressed assets and NPAs. This was all due to 39 borrowers, just 39. The government refuses to reveal the names of the defaulters or take action against them. The defaulters jet across the world.
In August 2015, the government announced a bailout of Rs. 70,000 crore over a period of four years under the Indradhanush Mission. Now another bailout of Rs 25,000 crore is being tried. Taxpayers' money will pay for 39 defaulter entities. And the banks will limp along.
5. PMGSY: Instead of the Centre now funding 100 per cent of rural roads, Delhi will fund only 60 per cent and the states 40 per cent. So in West Bengal, where Rs 3,000 crore was spent in 2015, the state government now has a burden of Rs 1,200 crore. Cooperative federalism?
Incidentally, for all the noise, PMGSY allocation has gone up by only four per cent - Rs 18,297 crore (revised estimates 2015-16) to Rs 19,000 crore (budget estimates 2016-17).
6. Oil price: The Indian basket of crude oil has crashed to an 11-year price low of $37.34 a barrel. The country is set to save Rs 2.14 lakh crore on its oil import bill alone in 2016-17. Every $1 per barrel change will mean an impact of half a million dollars for India!
Why are these savings not being reflected in higher social spending and increasing public investment?
7. Healthcare: In September 2014, West Bengal opened dialysis centres in as many as 34 hospitals. Yes, just in one month. In contrast, the union government says it will take care of the dialysis needs of patients in the country and improve their healthcare provision. But it has made life-saving drugs more expensive. In February, the government withdrew customs duty exemptions on 74 drugs including life-saving drugs to treat cancer, HIV and haemophilia. The Budget increases allocation for the National Health Mission by merely three per cent.
In West Bengal, I may add, 99 Fair Price Medicine Shops have been opened in just four years, providing medicines at 48-77 per cent below market prices. Discounts amounting to Rs 440 crore have been availed by 16 million people. Couldn't the savings from the oil bill be used for such truly life-changing missions?
8. FDI: A full 100 per cent FDI in marketing of food products produced in India has been allowed but the details are unclear. "Marketing" has not been defined and the distinction from FDI in multi-brand retail is vague. Deliberately vague? Should we smell something?
9. Education: For all its claims, the government has increased the Sarva Shiksha Abhiyan allocation by only Rs 500 crore, close to the price of a swanky bungalow in Lutyens' Delhi. Imagine, India's school education budget has gone up by a tiny 3.24 per cent. Are we not letting down our demographic dividend and our youngest citizens?
(Derek O'Brien is leader, Parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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