The Union Budget 2010-11 aims at 9% growth rate or more in the backdrop of estimated growth rate of 7.2% during 2009-10 and actual growth rate of 6.7% during 2008-09.

Growth of economy is good for everyone – it leads to more demand, more supply, more employment, higher standard of living and reduction in poverty.

Let us see which points of the budget may stimulate growth:

A. TAX LIBERALIZATION --
Following proposed measures would leave more money in the hands of the tax payers leading to more demand in the economy -
1. 10% slab rate for income between Rs 1.6 and 5 lakh (earlier it was between Rs 1.6 and 3 lakh); 20% slab rate for income between Rs 5 and 8 lakh (earlier it was between 3 and 5 lakh) and 30% slab rate for income above Rs 8 lakh (earlier it was above Rs 5 lakh). 
2. Simplified and more liberal rates of tax proposed under Direct Tax Code to be effective from 1-4-2011. SARAL II form consisting of only 2 pages for filing income tax return introduced. More computerization in tax returns processing. Scope of Settlement Commission for speedy disposal of tax disputes widened.
3. Deduction of an additional amount of Rs 20,000 allowed if invested in infrastructure bonds
4. Reduction in current surcharge of 10% to 7.5% on domestic companies
5. More deductions allowed on investment in research and hotels (to boost tourism)
6. All businesses with a turnover exceeding Rs.40 lakh are currently required to have their accounts audited. A similar provision also applies to all professions whose receipts exceed Rs.10 lakh. These limits now enhanced to Rs.60 lakh in the case of businesses and Rs.15 lakh in the case of professions.
7. To facilitate business operations of small taxpayers, the scope of presumptive taxation with a turnover of up to Rs.40 lakh has been enhanced to Rs.60 lakh
8. A unified Goods and Service Tax is likely to be introduced from 1st April, 2011. This would simplify indirect taxes substantially.

B. HIKE IN FUEL PRICES --
Letting petrol and diesel prices increase through duty adjustments so that they are at or near par with global market prices is a very good step. This would lead to healthy growth of oil sector. 

C. DISINVESTMENT OF PSUs –
During 2009-10, Rs 25,000 crore was raised through disinvestment of some PSUs such as OIL, NTPC, NHPC, REC etc. Rs 40,000 crore is proposed to be raised this year through disinvestment. A good beginning towards corporatization / privatization has thus been made. Eventually this should lead to better management and productivity.

D. SIMPLIFICATION OF FDI REGIME --
Complete liberalization of pricing and payment of technology transfer fee, trademark, brand name and royalty payments in respect of Foreign Direct Investment. These payments can now be made under the automatic route.
All prior regulations and guidelines are also proposed to be consolidated into one comprehensive document. These measures would boost foreign investment and growth.

However, these measures are too feeble. They pale into insignificance before the real, ugly features of the budget. These ugly features pertain to the perpetuation of the old license-quota-permit raj of the socialist era, whereby government keeps on pouring money in the bottomless pit of the bureaucratic inefficiency and corruption in the name of providing education, health, power, roads, agricultural facilities etc.

The Finance Minister said in his budget speech:
“An enabling Government does not try to deliver directly to the citizens everything that they need. Instead it creates an enabling ethos so that individual enterprise and creativity can flourish.” 

But contrary to what he said, he went on allocating huge amounts for government spending. See, for example, the outlays for some of the major sectors/projects in this budget:

Rs 1,73,552 crores for infrastructure like road, power etc [46% of total plan allocations]
Rs 1,37, 674 crores for social sector like education, health etc [37% of total plan allocations]
Rs 48,000 crores for upgradation of rural infrastructure
Rs 40,100 crores for rural employment [NREGA]
Rs 10,000 crore for subsidized rural housing
Rs 5400 crores for urban development
Rs 4500 crores for welfare of SCs, STs, OBCs etc
Rs 2600 crores for welfare of minorities

Why can’t the government get roads, ports, dams, electricity, rain harvesting, cold storage facilities etc made through private entrepreneurs on “build, maintain and charge from users” principle? That would not require such huge capital spending by the government and people will get better and cheaper services. It would also save tax payers’ hard earned money going down the drain by way of corruption and inefficiency. Foreign and domestic enterprises are fully capable of undertaking such ventures. Private Banks and venture capitalists are ready to fund them. Then, why year after year, government is trying to do things by spending public money which it cannot do efficiently?

The same is true for social sector – let private entrepreneurs build and run schools, hospitals, social insurance schemes, low cost homes, etc on profit basis. Government can just pay a minimum amount in cash to the weaker sections of people who would be free to buy their required services from private service providers. That arrangement would ensure social justice with efficiency minus corruption.

Public spending under the guise of welfare of the people on caste or religious lines as proposed in the budget is extremely divisive and regressive. This has been going on in some form or the other right from independence. This must stop.

JAGO PARTY SUPPORTS MINIMUM GOVERNMENT, NO DISCRIMINATION AND MAXIMUM PRIVATIZATION.