Budget exercise farcical, blame rests with the BJP

The Lok Sabha’s passage of the Finance Bill sans any debate is disconcerting. It makes the entire Budget exercise farcical. The blame squarely rests with the single-largest Opposition party, the BJP, that has disrupted Parliament. The government has budgeted spending of over Rs 16 lakh crore in this fiscal year. And that is not small change. Debate, law-making and holding the government to account are the principal activities of Parliament.

However, by skipping the debate, the Opposition has treated the Budget exercise shabbily. The BJP staged a walkout over the coal issue, while the Left, BJD and AIADMK left the House to protest against passage of key Bills without discussion.

That there have been precedents — including P Chidambaram’s 1997-98 Budget that was passed without a debate by the IK Gujral government to avoid a constitutional crisis —is weak defence. What the Opposition seems to be forgetting is the importance of the parliamentary system.

The government has made a dozen minor changes in the Finance Bill. It has dropped a clumsily drafted rule on the tax residency certificate (TRC), ending uncertainty over the tax treatment for Mauritius-based investors. The TRC would now be enough proof for a foreign investor to claim tax benefits in India. It has also lowered the interest tax paid by FIIs and qualified institutional investors on long-term infrastructure bonds.

This will boost infrastructure investment. The commodities transaction tax (CTT) is a bad idea, but some relief has been given as trading in commodity derivatives will not be treated as a speculative transaction. The government has also clarified that wealth tax will not be imposed on farm land. Clarity and certainty in tax laws will reduce litigation and improve investor confidence.