Budget has very little stimulus for growth, says economist

(From right) R.Anand, Partner, Tax and Markets,Ernst and Young Pvt. Ltd, T.T. Srinivasa Raghavan, MD, Sundaram FinanceLtd, S.Vaidhiya Subramaniam, Dean, Planning, SASTRA University, AaratiKrishnan, Deputy Editor, The Hindu Business Line, at the roundtable on unionbudget in Thanjavur on Thursday. Photo: B. Velankanni Raj

Union Finance Minister P. Chidambaram has not made any serious effort for maximising resources development in the Union Budget for 2013-14, said V.B. Athreya, Economist and Advisor, M.S. Swaminathan Research Foundation, here on Thursday.

Participating in a roundtable on union budget jointly organised by Shanmugha Arts Science Technology and Research Academy (SASTRA) University, Mr.Athreya said that there was no direct tax effort, no respite from inflation, and there was very little stimulus for growth in the budget.

“Praying for foreign capital to bail us out is not a sensible option,” Mr.Athreya said.

Mr. Chidambaram had pronounced growth as the highest goal. But the quality of growth should be taken into consideration.

Aarti Krishnan, Research Head and Deputy Editor, The Hindu Business Line , said that Union Budget was not a mere statement of accounts and it was an exercise in which the government explained its policy. Some highlights of this budget were taxing the rich, widening the tax net, and providing affordable home to people. “But this cannot be called a great budget” as challenges were more.

Inclusive banking

T.T. Srinivasa Raghavan, Managing Director, Sundaram Finance Ltd, said that western model was blindly copied in the budget exercise in India. “When we talk of demographic dividend, it may turn out to be a “demographic time bomb” if we don’t provide jobs to youth who were graduating in large numbers every year. Sixty per cent of the youth are going to be below the age of 25. Priorities have not been given where they are needed. We talk about inclusive banking. But fail to utilise the vast network of postal services available in the country. There are 1.5 lakh branches of post offices in the country. There is one post office for every 7,000 people. It has the vast network in rural areas.”

R. Anand, Partner, Tax and Markets, Ernst and Young Pvt. Ltd., said that over a period of time, there was substantial buoyancy in tax paying.

Another feature was direct taxes which stood at 18 per cent in 1992-93 had now reached 52 per cent in 2013-14. Indirect taxes were coming down.

“Dynamics of taxation is undergoing change.” He said that the Union Finance Minister had not announced any measure to retrieve black money which was put at Rs.25 lakh crore two years ago. “If 20 per cent of this money is retrieved, we can enjoy tax holiday for an year,” he said.

Mr.Anand suggested that people should be involved in budget making.

A draft could be prepared and circulated in December or January to people and get their opinion. This was being done in countries like New Zealand.

“Now in India it is between Industry and Government — You and Me. We should make it “our” budget involving people,” he said.

S.Vaidhya Subramaniam, Dean, Planning, SASTRA University, welcomed the gathering.