Oxfam estimates that if 4% of tax (Corona cess) is levied on the 954 richest families in India, the revenue equivalent to 1% of GDP could be around Rs 2 lakh crore.
Finance Minister Nirmala Sitharaman will present the first post-Coronavirus lockdown budget today. This will be her third budget. Both the general public and the business world have high expectations from this budget. The reason for the hope is his statement of 18 December last year. Hinting at the budget, she had said that such a budget would not have been presented in the last 100 years. In the Economic Survey presented in Parliament on 29 February, many hints have been given for this.
Krishnamurthy Subramanian, the chief economic adviser who prepared the economic survey, had said, “The time has come when the government should increase its spending and reduce the tax burden on the people.” However, private companies are not in a position to increase expenditure yet. On the other hand, the government lacks money to spend. Therefore, the expectation of tax relief is also less. The upside is the discussion of imposing Corona-cess, even if it hits high earners and companies.
Applying Corona cess on super rich will increase government’s revenue
Oxfam estimates that if 4% of the tax is levied on the 954 richest families in India, the revenue equivalent to 1% of GDP could be around Rs 2 lakh crore. The money received from such cess or surcharge remains with the central government, the states do not get a share from it.
New tax system may increase the exemption
Last year a new system of income tax was introduced. There is no other exemption other than NPS i.e. National Pension System. Therefore very few people chose this option. The government has not given any data for this. The Finance Minister may give data about this today.
To make the new arrangement attractive, tax exemption on PF, LTC and donation can be given. For example, due to expenses related to work from home, the limit of standard deduction for working people can be increased from Rs 50 thousand. The tax benefit on the health insurance premium can also be increased under section 80D. Investment limit under 80C is 1.5 lakh rupees. The government has received suggestions to increase this too.
Double spending on healthcare
Spending on healthcare is likely to increase the most. The Corona vaccine is estimated to cost 25-30 thousand crores. The last health budget was Rs 67,484 crore. This can be doubled. In the National Health Policy 2017, the Center aimed to spend 2.5-3% of GDP on healthcare. But it could only reach only 1.5% in 2019-20. According to World Health Statistics, India ranks 179th in the ranking of 189 countries in terms of government spending on health.
At present, 65% of the total out of pocket of health is spent. According to the survey, if the government increases the spending, then the out of pocket expenses of people will be reduced to 30%.
Agricultural loan target may be 19 lakh crore
Keeping the farmer movement in mind, special attention can be paid to farming. 6,000 rupees are received every year under the PM Kisan Yojana. It can increase by Rs 2,000. A new target of Rs 19 lakh crore can be set for agricultural loans. It was Rs 15 lakh crore last year.
Discount may increase on affordable housing
In order to increase demand in the economy, buying an affordable house can be given an incentive. If nothing else, like the previous year, the government can extend the additional rebate on interest up to Rs 1.5 lakh for another year. That is, in the income tax calculation, the rebate of 2 lakh rupees in interest on home loan was increased to a total of three and a half lakh rupees.
Free smartphone and tablet to students
Due to Corona, there has been an emphasis on online studies for almost a year. According to the survey, two years ago 36.5% of rural students had smartphones, laptops or computers, now 61.8% have them. To increase this, a scheme of giving smartphones and tablets for free to the students of the village can be brought.
Scheme for migrant labourers
The workers in the unorganized sector are more affected due to Coronavirus. The International Labour Organization released the Global Wage Report 2020-21 in December. Accordingly, the salaries in the organized sector has come down by 3.6%, but the earnings of the unorganized sector employees have decreased by 22.6%. On the other hand, profitability of listed companies has increased by 25% due to retrenchment of employees and other expenses. There may be some announcements in the budget to bring migrant laborers under social protection.
Import duty may be increased for self-reliant India
Import duty can be increased on certain things under the Self-Reliant India Campaign. Last time too, duty was increased on many things including mobile phones, electronics and electrical parts. Goods coming from abroad are expensive due to increase in import duty. This increases sales of goods manufactured in the country. GST rules can be made easier for small traders.
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