Thursday, February 28, 2013

Budget 2013 - An Opportunity Missed, but election funds will flow

The last budget of UPA before going  to election in 2013 or  2014  was an opportunity for the prime minister Manmohan Singh to show what difference does it make to be an economist.  From the budget, presented by Finance minister Chidambaram it seems that whole government is busy in covering up the scams and has no time to think about serious mattes like yearly planning and resource allocation.
Had No Time, This time

Though there is nothing to talk about  it, but still a few recommendations of budget are worth noting.  Most important is its efforts to collect election fund.  It wants to award in the next six months 3,000 kms of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan  and Uttar Pradesh.  These toll roads would add little more liability on Indian public and business, but ….    ..

Next is  an effort to please the builder lobby.  By an estimate in Gujarat alone more than three lakh of  ready flats  were unoccupied by Dec’2012.  This was because of unrealistic high rates demanded by the project developers.  To increase their sale the finance minister  has  recommended  an additional deduction of interest upto  Rs 1 lakh for a person taking first home loan upto  Rs 25 lakh during the period of 1.4.2013 to 31.3.2014.  I have  no statistics about the benefit DLF and similar other companies will get from this recommendation around Delhi and Moradabad.

To buy a  house or land there are two components  to be paid – one through cheque or draft for the amount which is reflected in the documents – on which stamp duty is paid.  Other,  which is forced to be paid  in cash  and no receipt is issued.  This is what looks  as a black money to baba Ramdev. 

High duties and restrictions are the main reasons for under valuation of property in documents.  To add to the plight  honourable FM has recommended  a TDS at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds ` 50 lakhs. Agricultural land to be exempted. Increase in  floating black money in land  and building deals – pet of all politicians and  government officers

The government has taken no steps to improve law and order  or speedy resolution of court cases after hue and cry in December 2012.  The message is that the Current Status Quo will be maintained. But to deal with  media highlighted cases  a fund - “Nirbhaya Fund” – is to be setup with Government contribution of Rs 1,000 crore. Is  this the solution?

Only provision in this budget liked by me is Rs 15,260 crore allocated to Ministry of Drinking Water and Sanitation and Rs  1,400 crore provided for setting-up of water purification plants in 2,000 arsenic  and 12,000 fluoride-affected rural habitations.

A  better budget can not be expected from a  finance minister who puts two times unplanned expenditure estimates than the planned  for which allocation is at Rs 5,55,322 crore. Against this  Non Plan Expenditure is estimated at ` 11,09,975 crore.

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