Dr S S Sangwan

Comments on Union Budget 2010-11 by Dr S S Sangwan
Inflation not Addressed
The Government has accepted inflation especially the double digit food inflation as a major concern but it has not been addressed as one of the main focus in the contours of the budget. Government has not focused the food grains and sugar supply management which in mess due to vested decisions of agriculture and food
Inclusive Development
The inclusive development has been adequately addressed in the budget through higher allocation for school education, health, NREGA, Indira AWAS Yozna, Shahari Rozgar yozna, skill development programmes, backward region grant, pension scheme for unorganized sectors, etc.
Women and other weaker sections development is covered by increasing allocation for ICDS, Shaaksar Bharat programmes for literacy of women, Ministry of Social welfare and justice, Ministry of Minority Affairs, etc.
Financial inclusion has also been taken care of by policy to bringing in new banks by RBI, augmenting the Financial Inclusion and Financial Technology Inclusion Funds, Micro-Finance Development and Equity Fund' and capital support to RRBs and weak
Agricultural Growth
Food processing has been well addressed especially in view of type of products demanded in the big malls and retail shops. The various concessions custom and excise duties and external commercial borrowings for the machinery and equipments for cold storage, cool houses, supply chains, refrigerated vans, etc is a desired step to compete with such imported food items.
However, adequate emphasis is lacking in increasing food production. The allocation of Rs400 crore for Eastern states of Bihar, Orissa, West Bengal, Chhattisgarh, Eastern UP is more of politics than economics when the programmes have not been specified. It is well known fact that the food situations of India depend upon production in North and Central India.
It seems the Agriculture credit has become a panacea for agricultural production in the last decade or so. If a known persons peeps into the credit target of Rs 375000 crore, it will be eye wash as the real flow of credit may be much less than it . Govt may be very well knowing the actual flow from the amount of interest subvention given each year. The last decade of (high) growth in agricultural credit has almost no correlation with the (least) growth in agricultural production(physical). The various interest subventions on the rate and repayment incentive do facilitate but the remedy of agricultural production lies somewhere else.
Supply of quality seeds and sapling are the basics for increasing production, ceteris peribus, therefore, a nation wide policy of supplying improved seeds and seedlings at concessional rate especially to farmers upto 2 ha may be a large programe at par with the credit. It will take 3 years to be realized and now it is time for the government to start even ripe the political harvest after 3 years. Let all agricultural programmes aim to set nursery and seed farms and provide related extension service.
In the long run the issues of unviable holding and some farm of corporate farming can be overlooked
Mobilization of Resources
The budget has proposed to mobilize net Rs 20,500 crore for the year. Of this 36 % from withdrawal of custom duty concessions, 29% from 2% increase in excise duties which were a given as stimulus package in recession, 17% service tax with inclusion of additional services like air travel, lottery, executive health check up, marriage halls, film copy rights, tutorial coaching, commercial property booking etc., 18 % from corporate tax while losing 3 % in individual tax and remaining 3 from others.
The resource mobilization efforts appears to be rational and progressive except the retrogressive tax concession to higher income groups and increase of basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and 10% on other refined products is restored and imposed Rs 1 per lit the Central Excise duty on petrol and diesel. The later one will have compounding effect on inflation
Income tax concessions to higher income groups only
The income tax benefits shall accrue to those in the income slab of Rs 3 lakh or more. The vast majority of those below this slab especially the pensioners, low salary employees shall left out of any of the concession
Even the full benefits of one lakh saving and additional Rs20000 for LT bonds will be availed by the higher income groups.
The prevailing rates of interest on saving instruments are also very low.
Why the government excluding retired persons in the age group of 60 to 65 from the benefits of income tax when both are in same category from income point of view.
Therefore, its is highly desirable to increase the nil income limit to Rs2 lakh and lower the income tax Sr. citizen age to 60 years.

Dr S S Sangwan drsangwan8@gmail.com

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