Jaitley’s budget speech was a marquee one for numerous reasons and interestingly non-budgetary ones. While financial prudence is a challenge for every developing economy, particularly one infested with the malice of corruption and unscrupulous defaulters who are always one step ahead of the law. With demonetization, Modi put the responsibility of development back on its citizens citing tax evasions and so-called ‘Kala Dhan’ which is now a compulsive battle for the BJP even if has been a mistake of colossal proportions. However, if anything a 34% spike in advance tax did make a dent in mindsets about the mythical reach of the law and his noble intentions.
Jaitley pointed out the dismal tax to GDP ratios and even worse tax-payers to citizens ratios as the country listened in awe. The country has suffered more because of poor administrators than corrupt politicians. If administrators had done their jobs, politicians would have much more wealth to work with for development projects and loot they amassed would have been insignificant in proportion. Jaitley did address some of those issues by offering the country a meagre tax without any scrutiny to incentivize them to join the tax payers club. I doubt the country will bite the bullet nonetheless. For the compulsive tax evader’s intentions are loud and clear, and even after the innovative inventions of Indians’ to protect their Kala Dhan in the demonetization exercise Jaitley seems to have learnt little.
Like they say the devil lies in the details three decisions in this budget will have will have far-reaching implications on the future of the country.
100% Tax-break on Income from affordable housing within 25 Kms of four metros
The Modi government had laid down its agenda promising to create jobs in rural India thereby halting the exodus of its populace to urban centres. While that was an excellent measure and the additional allocation to MNREGA will help that objective, this one seems counterproductive. The cities of India are already overpopulated to the extent that the quality of life is the worse than most metros anywhere. Without adequate investment in public infrastructure for these cities, tax sops for affordable housing will only worsen the situation. It will merely extend the borders of the mess to an extended radius of 25 square kilometres. In any case, while this will incentivize developers to que up for affordable housing projects, the policy has no way to ensure these homes will actually be affordable. Instead, the government should have taken up cluster development on the lines of Smart Cities. Setting aside large parcels of land for affordable housing projects and using the foregone tax to set up basic civic infrastructure and connectivity back to cities. This policy will spring up millions of houses cramping every road into the city and not to speak of the mindless development which will happen there in the absence of a municipal body to govern it.
Transparency in Electoral Funding
The country has been up in arms against the political class in this area. While what has been done yet is merely the tip of the iceberg, yet in the context of the prevailing situation it is a historic diversion. Every receipt above Rs. 2000.00 must have an electronic trail virtually puts an end to unaccounted cash being deposited into political accounts. Let’s say a BSP does claim that it has a million people donating in cash, even that cannot amount to more than 200 crores each year. To add to it the electoral bonds is a brilliant idea which allows donors to keep their identity discreet.
Its time now the government gives the powers and budgets to the election commission to monitor, audit, investigate and penalize politicians for misuse of its provisions including those of misreporting election spending and with the same vigor as the government intends to do with its ordinary citizens. This will give much needed teeth to the election commission. A meager budget of 200 crores a year for this will change the way elections happen in India and bringing accountability. And while on it, why not an audit agency which will print a report card for every candidate and party comparing its promises to deliveries at the Municipal, State and Central level. It will teach politicians how to promise less and deliver more.
A New Metro Rail Policy
It is not the business of the government to be in business. However, it is the business of the government to provide for business. Along with laws, an able justice delivery system it is the primary objective of the government to provide for roads, transport, water, waste management and public facilities. For long these have long been ignored primarily because they are a subject of municipal corporations and state governments and also subject to a slew of litigations delaying them forever. The finance minister’s announcement merely mentions the policy for Metro Rail without giving any details. Apparently the policy refers to removing financing hurdles for such projects by innovative financing means. While this is welcome, a robust policy safeguarding public projects with a law barring most kinds of litigations in the interest of public welfare must be proposed. Simply speaking any kind of public infrastructure project be it rail, road, water, waste or the likes must be protected from scuttling by frivolous petitions and objections by the courts. Atleast 100 cities in India are already too late for having a bustling metro connecting its suburbs and decongesting the roads allowing for much needed pedestrian infrastructure like footpaths and public toilets.