Union Budget for 2016 was placed on 29th February 2016 by Finance Minister, Mr. Arun Jaitley with focus on rural infrastructure. There is no dispute about the poor conditions of farmers and rural population in India. 70% of the population based in rural India are basically dependent on agriculture and contribute just 15% of the GDP. Their low percapita income is cause of low consumption base for many industrial goods. Rise in their income will lead to growth due to very well known economic law of marginal propensity to consume and push the growth engine. Our FM has targeted to double their income in five years. Apart from above, FM has also promised to implement 7th pay commission recommendations for Central Govt. employees to kickstart the demand.
All this sounds good, but the source of funding comes from increased service tax, tax on luxury goods, increased cess on coal, increased surcharge on rich, tax on PF withdrawals, tax on dividend distribution etc. etc. We have also reduced the capital expenditure on defense to make way for OROP.
Except surcharge on rich, each of the tax is going to affect the common man. Even tax on PF withdrawals is going to impact large number of salaried employees. Again, the tax on dividends above Rs. 10 lacs will discourage the promoters to declare dividends, which too will affect the minority and small shareholders. Promoters will prefer to draw more remuneration or consultancy fee instead of dividend distribution. This will make rich, more rich by more assets under their control. Indirect taxes will just pass on to the consumers and have inflationary impact.
It is high time, the public start protesting this give and take policy. Collecting money by way of indirect taxes and giving it back by subsidies entail huge establishment cost, which too is borne by the public. Govt. should just concentrate on providing affordable education to masses with job orientation. Job oriented courses in rural hinterland will reduce the percentage of population dependent on agriculture and their percapita income will rise automatically as less hands will share the same income.
Except surcharge on rich, each of the tax is going to affect the common man. Even tax on PF withdrawals is going to impact large number of salaried employees. Again, the tax on dividends above Rs. 10 lacs will discourage the promoters to declare dividends, which too will affect the minority and small shareholders. Promoters will prefer to draw more remuneration or consultancy fee instead of dividend distribution. This will make rich, more rich by more assets under their control. Indirect taxes will just pass on to the consumers and have inflationary impact.
It is high time, the public start protesting this give and take policy. Collecting money by way of indirect taxes and giving it back by subsidies entail huge establishment cost, which too is borne by the public. Govt. should just concentrate on providing affordable education to masses with job orientation. Job oriented courses in rural hinterland will reduce the percentage of population dependent on agriculture and their percapita income will rise automatically as less hands will share the same income.
