Union Budget: Reading between the lines, the joke is on you
The problem with India at the moment is that nobody is buying anything, because there is no money left in the pocket of consumers. And since demand has fallen, the growth rate is down to less than 5 per cent, the lowest in the Modi raj.
A striking feature of the NDA-2 government is that most of its senior members always appear grim and sometimes even angry, as if in a state of subdued rage.
Think about it, when was the last time you saw Amit Shah smile? When did you witness Smriti Irani not speaking with her nostrils flared, lips curled in derision and hands flailing? When was the last time Rajnath Singh did not wag his finger? When did…well, let’s say governance is serious business and the Narendra Modi government looks the part.
Many Indians who follow the Modi sarkar’s body language believe the serious demeanor is actually a blessing for the public. The last time the Prime Minister laughed—in Tokyo, in the afterglow of the demonetisation scheme, when he chortled, “there is a wedding in the family, but there is no money”— the entire country ended up crying.
But, then, there are many advantages of being dour, wearing a permanent scowl. One of them is that you can crack a joke and yet, because you said it with utmost seriousness, everyone takes it seriously. Like Nirmala Sitharaman proved in her marathon Budget speech on Saturday (February 1).
In her speech, which she ended mercifully after 2 hours and 40 minutes, because she was thirsty, the finance minister delivered some heavy lines with characteristic nonchalance. She referred to something called a Sindhu-Saraswati Sabhyata (perhaps the Hindutva moniker for the Indus Valley Civilisation) even when the exact location of the Saraswati River is still disputed. She claimed hieroglyphics from the ancient Civilisation had been deciphered and they pointed at India’s prosperity several millenniums ago. This when scholars like Asko Parpola argue that the script based on icons has not been deciphered primarily because there are no bilingual inscriptions of the Indus signs in any other known script. But, let’s not quibble over the footnotes.
Also read | Can Nirmala Sitharaman find enough growth pills for the ailing economy?
The joke is on you
By the time you read this, tax experts would have dissected the finance minister’s headline-making assertion that she is creating new tax slabs that would make the middle-class go laughing all the way to the bank. With this in mind, she announced a parallel scheme with eight slabs that gives tax payers the liberty of paying less tax, but with a rider: there will be no exemptions. This means, you can’t claim exemptions on HRA, Medical Bills, LTA, insurance premium, and, though the ministry is yet to clarify it, on tuition fees, contribution to Employee Provident Fund.
When you sit down to do the math, it would become evident that under the new scheme, people who were availing the existing exemptions would end up paying more tax to the government. Thankfully, the finance minister has left the option of filing returns under the old scheme open and made the new slabs optional. If that were not the case, it would have been a classic case of picking your pocket and making you feel grateful for it.
That the finmin can’t give tax concessions was evident from the government balance sheet. In the current financial year, the tax collections have been the lowest in several years, leading to a shortfall of around ₹2.5-lakh-crore. You can’t expect a government that’s desperate to sell its family silver to generate more money to be charitable to taxpayers. But, at least you can’t blame Sitharaman for cracking a joke with a poker face.
GDP, no laughing matter
In her 2019 speech, the finmin had quoted Tamil poet Thiruvallavur to argue that if an elephant gets its share of paddy, it doesn’t like to trample the entire field. (Implying, if the governments gets the requisite tax, it won’t harass anyone). This year, however, she has ignored the elephant in the room—declining growth.
The problem with India at the moment is that nobody is buying anything, because there is no money left in the pocket of consumers. And since demand has fallen, the growth rate is down to less than 5 per cent, the lowest in the Modi raj. The expectation was the finmin would address the issue and initiate measures to revive growth. It would announce big investments, give tax sops and increase outlay for key sectors. But, the finmin didn’t even acknowledge the problem. Quoting Thiruvallavur, she instead, argued India is now a place that has five jewels that adorn a happy nation: 1) freedom from illness (we’ll revisit this if and when Coronavirus lands in India); 2) abundance of wealth (saving rates and jobs are falling drastically, 3) good crops (rural distress is now an accepted norm), 4) happiness (let’s not talk about CAA, or the lockdown in Kashmir); and 5) secure borders.
Also read | Understanding Union Budget, one jargon at a time
All this is just optics, inspired by the pigeon’s ploy of turning its head to the danger facing it. But, what’s more laughable is that in spite of a slowdown, its inability to spend more, its slogans have remained unchanged. IT claims to double the income of farmers but is not ready to spend more on agriculture (the allocation for next fiscal is actually lower when adjusted against inflation). It wants everyone to be healthy but has no money for the health sector and is hoping that hospitals in the private sector (PPP model) would make Indian ayushman (live long).
The cake, of course, goes to the finmin’s belief that the nominal GDP growth next year would be 10 per cent and the tax collections would, thus, also be buoyant. On current evidence, the chances of a human being running 100metres in less than 9 seconds are much brighter than India clocking a 10 per cent growth. This is evident in the economic survey tabled in Parliament on Friday, where growth rate has been pegged between 6-6.5%. But, if the finmin had accepted this figure as serious economics, how would have her government continued to claim India would be a $5 trillion economy by 2024.
It may sound like a joke now, but at least Sitharaman is not smiling. Neither is, incidentally, the stock market, which responded to Sitharaman with a Lal Salam, falling by nearly 988, without any sign of recovery.
On a lighter note, perhaps Sitharaman believes why anyone should be allowed to smile when the entire government is so serious. As Anurag Thakur said, goli maaro…
