Budget will focus beyond tax breaks
"The focus of the budget will be on common man and rural areas," says the finance minister P Chidambaram.
By TNN |
NEW DELHI: If only major tax breaks make a dream budget, then you may be in for a disappointment. But a strong dose of measure to boost growth and fresh investment will definitely be at the core of Union Budget ���06-07. At least, that���s what finance minister P Chidambaram has promised.
No major tax relief on personal income is in the works, although there���s no escaping the poll-promise of a skew towards aam admi. ���The focus of the budget will be on common man and rural areas,��� Mr Chidambaram said. Tax evaders and stop-filers, however, have reasons to worry.
The tax administration is being toned up and information culled out from third-party transactions will be used to ���go after��� tax evaders. The threat has already worked as some 12 lakh more people filed tax returns for assessment year ���05-06 till October ���05.
You can shout from the roof tops, but FBT is here to stay. Corporates will have to live with the fringe benefit tax although they can expect some relief. When a wet-behind-the-ears television reporter from a business channel quizzed the FM on FBT, he shot back: ���I would urge you to read the lead edit in today���s edition (January 11) of The Economic Times.��� Yes, Minister!
No major tax relief on personal income is in the works, although there���s no escaping the poll-promise of a skew towards aam admi. ���The focus of the budget will be on common man and rural areas,��� Mr Chidambaram said. Tax evaders and stop-filers, however, have reasons to worry.
The tax administration is being toned up and information culled out from third-party transactions will be used to ���go after��� tax evaders. The threat has already worked as some 12 lakh more people filed tax returns for assessment year ���05-06 till October ���05.
You can shout from the roof tops, but FBT is here to stay. Corporates will have to live with the fringe benefit tax although they can expect some relief. When a wet-behind-the-ears television reporter from a business channel quizzed the FM on FBT, he shot back: ���I would urge you to read the lead edit in today���s edition (January 11) of The Economic Times.��� Yes, Minister!
More pointers to the Budget: Investment climate may become more friendly. Left or no Left, rest assured that disinvestment of minority stakes will take place and overseas investors can breathe easy on investing through participatory notes.
Also, there may be no shocks on inflation or on petroleum prices. The government intends to keep both on a tight leash. Subsidies on cooking fuel will continue, at least in the near term. A decision on foodgrain subsidy will be taken after discussions with all political parties.
That���s some of the highlights from FM transmission ��� that is, Mr Chidambaram���s interaction with financial writers today providing a peek preview of the budget. The hour-long Q&A session laid out broad contours of the budget.
On the macro front, the finance minister said that both fiscal and revenue deficit was on course to meet budget estimates and he may be getting on with the targets for reduction required by the Fiscal Responsibility and Budget Management Act (FRBM Act) in the next fiscal. Fiscal deficit for the year could end at 4.3% of the GDP and revenue deficit at 2.7%. That would mean fiscal deficit target for next year would be cut by 0.3% to 4% and revenue deficit by 0.5% to 2.2%.
Reforms will stumble along, the ���rainbow��� coalition permitting. Consultations with the Left parties and the Congress is a reality to live with for the coalition government. But no reforms bill, be it the banking laws amendment bill or pension bill is to be withdrawn. ���They will go forward in Parliament with or without modification,��� Mr Chidambaram said.
The best news: the economy could perform as well next year as it has this past year, subject of course to incremental investment taking place and external factors not wreaking havoc. Oil prices will have to be stable, and the nation should be spared national calamities. More, world output should grow at 4% if we are to achieve more than 7% growth next year, Mr Chidambaram said.
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