Rejecting criticism that the Budget was not bold or reformist, Finance Minister Pranab Mukherjee on Sunday asked the critics to be “more realistic” to political ground realities.
“I am a bit disappointed,” he told PTI in an interview here while answering a question about reactions to the budget he presented two days ago.
Acknowledging that the natural expectation would be that “all corrective measures” should have been taken in the budget because it would be difficult to do so in 2013 ahead of elections a year later, the Minister said that the budget was not just “merely the economic theory of what should be done or what should not be done”.
“Budget is also a political document in the sense that it requires the approval of Parliament,” he emphasised adding, if budgetary proposals do not receive approval of coalition partners it becomes difficult to implement.
Mr. Mukherjee pointed out that it was not possible to consult allies before the budget because the proposals were confined Prime Minister and Finance Minister only.
Therefore, wider consultations were possible only after the presentation of the budget and “we shall have to take various stakeholders on board”, he said.
Conceding that his indirect tax proposals may have “some inflationary impact”, Mr. Mukherjee said he did not not have a mechanism to prevent manufacturers from passing on the burden to the common man.
At the same time, he pointed out that inflation was not not only due to taxation, because when inflation was 10 per cent, manufacturing inflation itself was the highest in nearly two years.
Even when the food inflation was negative, manufacturing inflationary pressures continued even upto last month. Therefore, one cannot conclude that the levies will lead to inflationary pressure although he did not not rule out some inflationary impact.
Defending the 2 per cent increase in the Excise Duty to 12 per cent, the Finance Minister said it was 14 per cent in 2008 when he had brought it down to 10 in view of the global economic crisis.
Now he has raised it but still not not to the level of 14 per cent, he added.
Mr. Mukherjee also said that he has aligned Service Tax and Excise Duty which was essential to move towards GST (Goods and Services Tax) because we are advocating that and state and central taxes should be the same for goods and services.
“So assuming that when we move towards the GST, the state taxes will be around 12 per cent. These are some of the considerations, which apart from resource mobilisation, weighed in his mind,” he said.