Union Budget 2019 by Piyush Goyal was not a vote-on-account but a full-fledged budget

The Union Budget 2019: Less economics more propaganda

Economy
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The Modi regime was supposed to present an interim budget, also known as vote-on-account, on 1 February 2019 at the Lok Sabha, and not a full-fledged union budget. However, breaking all constitutional conventions and even retracting on his own assurance that no full budget will be presented, the interim Finance Minister Piyush Goyal presented the quasi-full Union Budget 2019 with an aim to lure voters before the crucial Lok Sabha election.

If a budget is supposed to have a tag line, then the Union Budget 2019 should have the tag line — please vote for the BJP, please! This is how frantic and desperate both Piyush Goyal and the entire treasury bench along with the prime minister appeared.

This contravention of constitutional propriety is not a strange thing to expect from the BJP, especially the Modi regime. During the last five years of its journey, the Modi regime has violated so many constitutional norms, values, and ethos that even all governments preceding it didn’t violate collectively.

So, it was expected that rather than placing a vote-on-account, which asks the parliament’s permission for the government’s expenditure between 1 April until a new government is formed and a full budget is passed, Modi will try to hoodwink the Indian people with freebies and populism through a full budget packaged as an “interim” one.

Lollipops are dolled out for everyone; the poor farmers, the working class in the unorganised sector, the middle class, and the rich, however, no promises are made that these lollipops are sustainable. The press started highlighting the dolled out benefits and remained mum on how the Modi regime is trying to implement them or even the feasibility of these programmes and schemes.

In the following paragraphs, we will highlight some of the key announcements by Goyal and will see whether they are really beneficial for the people or are they sheer hoodwinking measures.

The income-tax rebate on tax slab of Rs 250,000 to Rs 500,000

The rate of individual taxation and the taxable income slabs never change in India according to the rate of inflation and cost of living, though the central government employees get their appraisal done by pay commissions on the basis of the rise in the cost of living. This is a tragedy of the Indian taxation system.

While the former Finance Commission led by former BJP leader and former finance minister Yashwant Sinha suggested during the UPA era that the tax slabs should be connected with the rate of inflation to have a realistic taxing solution, however, the suggestion was thrown to the backburner; even the Modi regime never paid attention to that suggestion.

Since coming to power, the Modi regime kept promising a big relief to the salaried middle class over income tax. Finance Minister Arun Jaitley once reduced the net tax payable by those with an annual income between Rs 250,000 to Rs 500,000 to 5% from the earlier rate of 10%.

The medical allowances provided to employees up to Rs 15,000 per annum was increased to Rs 40,000 per annum and no bills were made mandatory for the amount.

Though these moves provided little relief to the middle class and lower-middle class, it didn’t resolve the problem created by an arch-reactionary direct taxation system.

There has been a demand to rationalise the income tax slab to ensure that the middle class, already reeling under the juggernaut of jobless growth, high inflation, the rising price of fuel and medical treatment, is provided relief from the regressive taxing system.

The BJP kept the proposal hanging until the last budget of the Modi regime’s first tenure to ensure that the middle class can be astonished by a surprise before the election.

What the BJP leaders and the corporate-controlled mainstream press is calling a tax exemption since Goyal’s announcement, is actually no exemption but a promise of a tax rebate.

Hitherto, the following income-tax slabs have been in use:

For individuals below 60 years of age and Hindu Undivided Families (HUF)

Annual Income Tax RateHealth and Education Cess
Up to
Rs 2,50,000*
No taxNil
Rs 2,50,001 to Rs 5,00,0005% of total income exceeding
Rs 2,50,000
4%
Rs 5,00,001 to Rs 10,00,000Rs 12,500 + 20% of total income
exceeding Rs 5,00,000
4%
Above
Rs 10,00,000
Rs 1,12,500 + 30% of total income
exceeding Rs 10,00,000
4%

For individuals (senior citizens) above 60 years but below 80 years of age

Income Tax SlabsTax RateHealth and Education
Cess
Income up to Rs 3,00,000*No tax Nil
Income from Rs 3,00,000 – Rs 5,00,0005%4% of Income Tax
Income from Rs 5,00,000 – 10,00,00020%4% of Income Tax
Income more than Rs 10,00,00030%4% of Income Tax

For individuals (senior citizens) above 80 years of age

Income Tax SlabsTax RateHealth and Education
Cess
Income up to Rs 5,00,000*No tax Nil
Income from Rs 5,00,000 – 10,00,00020%4% of Income Tax
Income more than Rs 10,00,00030%4% of Income Tax

Despite the hullaballoo over tax exemption, the Modi regime has not changed the exemption slab in any of these income-tax slabs but only provided a rebate up to Rs 12,500 to people who are in the income slab between Rs 250,000 to Rs 500,000.

An exemption slab is different from a rebate, as the latter is a relief that’s provided to the taxpayers in the form of a refund on taxes that they have already paid in a financial year to the Income Tax Department. An exemption means no tax is payable at all.

Section 87A of the Income Tax Act provides a rebate of Rs 2,500 or the total tax paid, whichever is lower, to the individuals with total income not exceeding Rs 350,000 per annum.

The Modi regime has proposed a modification of Section 87A to provide 100% rebate to taxpayers with an annual income up to Rs 500,000. Which means the people with an annual income between Rs 250,000 to Rs 500,000 are still in the taxable slab and they can get the rebate up to Rs 12,500 on the tax paid by filing returns.

The standard deductions, under Section 16 of the Income Tax Act was earlier fixed at Rs 40,000 in 2018 and in the Union Budget 2019 it has been increased to Rs 50,000.

This will further complicate the process, as many taxpayers will have to wait for the government sending the refund by the mid of the year after deducting the money between January to March.

For example, a person with an annual income of Rs 450,000 will have the following tax liability:

IncomeTaxable AmountTax
Percentage
Tax Amount
Up to Rs 250,000No taxNil0
Between Rs 250,000 and
Rs 500,000
Rs 200,0005Rs 10,000

Total tax rebate the individual will get after filing a tax return is Rs 10,000.

However, for anyone above an income of Rs 500,000, there remains no change in the tax amount and they have to pay 20% on any amount exceeding Rs 500,000 up to Rs 1000,000.

Though Goyal said that no tax would be required to pay if an individual with an annual income of up to Rs 650,000 invests in tax saving instruments, provident funds, health and life insurance, etc, this isn’t a new benefit but the salaried classes, self-employed people and small traders have been doing this for years.

This tax rebate again points towards the double standards of the Modi regime. With the 124th Constitution Amendment Bill, which proposed 10% reservation to “economically weaker sections” of the society who are not beneficiary of any other form of reservation — which means exclusively the upper-caste Hindus — the Modi regime fixed the slab to determine economic weakness at an annual income of Rs 800,000 from all sources.

If people earning up to Rs 800,000 per annum from all sources can be called economically weak, then what’s the logic of taxing those earning between Rs 500,000 to Rs 800,000 per annum at 20% rate plus 4% cess? No BJP defender will dare to answer this question.

These proposed tax rebates will be available from the next financial year, ie April 2019 onwards and it actually needs a rewriting of the Finance Bill and Income Tax Act. Any rewriting of Income Tax Act or the Finance Bill is generally out of the scope of an interim budget or vote-on-account.

By taking a step towards that direction, the Modi regime has proved that the Union Budget 2019 is a quasi-full budget prepared exclusively for election gimmick and not to merely get expenditures approved by the parliament.

The pro-farmer gimmick

Though there was a rumour about the Modi regime pushing for a full budget on 1 February 2019 to provide a large-scale loan waiver to farmers, the finance minister chose silence on the topic.

Rather, the Modi regime allocated Rs 750 billion (Rs 75,000 crore) towards Pradhanmantri Kisan Samman Nidhi, a new scheme under which Rs 6,000 will be given as assistance to each farmer family of the country whose net landholding is less than 2 hectares (5 acres).

This amount will be paid in three instalments of Rs 2,000 each directly to the bank accounts of the farmers and Goyal considered December as the beginning of the scheme to take a circuitous route to dodge the Model Code of Conduct when the first instalment of the payment will be made to nearly 120 million farmers, a figure that’s taken from the 2015-16 Agricultural Census.

A lot of opposition members are questioning the logic behind providing Rs 500 to a farmer’s family in a month, which, if the family has four members, would translate into Rs 4.16 per day per member.

Though the amount is minuscule and a cruel joke, still it can create rural demand in the hard times of rural stagnation like this, and that can bring some, though quite less, momentum in the rural economy.

However, though Goyal announced the scheme with much ado its implementation at such a large scale, following the identification of beneficiaries is not an easy job and how the Modi regime will be sharing the first instalment of Rs 2,000, is still not known to anyone.

If the farmers get the amount it won’t automatically translate into votes for the BJP as the agrarian crisis has several aspects and the BJP or the RSS are not willing to deal with it to safeguard the interests of its core support base of upper-caste feudal landlords.

The major among them is the problem of feudal production relations, ie the ownership of the means of production by the feudal landlord classes, which leaves a large number of peasants either landless or with very small land holding that even doesn’t allow them two meals a day.

How the landless peasants will benefit from this scheme is yet to be seen, however, if the historic data of Modi regime’s scheme implementation is analysed then the conclusion one would arrive at will give negative signals regarding the future success of this scheme.

Though Goyal declared that Rs 200 billion out of Rs 750 billion is already allocated for this welfare programme by starting the programme from December 2018, he didn’t tell us how much fiscal deficit will be caused by this programme that has no solid aim or purpose.

Pension scheme for the unorganised workers

The Modi regime declared that the unorganised workers will get a new pension scheme under which they will have to deposit Rs 100 per month and after reaching the age of 60 they will get an assured pension of Rs 3,000 per month.

Though Goyal and other sycophants of Narendra Modi praised the prime minister for bringing such a “game changer” for the poor unorganised sector workers, they didn’t care to inform the parliament who have calculated the premium and the benefit amount.

As per this calculation, if a 25-year-old unorganised worker starts putting Rs 100 per month from now onwards then after 35 years, ie from 2054 onwards, that worker will get a monthly pension of Rs 3,000!

If Rs 3,000 is what the Telangana government is paying now as pension, if the trade unions have been demanding a universal pension scheme at half the amount of the prevailing minimum wage, then why the Modi regime is patting its own back by proposing a scheme that’s absolutely demeaning to the working class?

If Modi can take Anil Ambani along with him to Paris and provide him with a multi-billion dollar aircraft maintenance deal compromising national security, what’s stopping him from providing the unorganised sector workers with a respectable universal pension package?

This scheme is utter rubbish and a straight, on-the-face vote garnering technique adopted by Modi and his coterie. The scheme is beneficial to none and will be used to create a major pool that will be utilised by the Modi regime to help its corporate donors with timely bailouts from crisis and debts.

The neglected zone

While the klaxon is blown over the above gimmicks specially tailored keeping in view the forthcoming Lok Sabha election, it’s hard to miss the gross neglection of one of the largest welfare schemes – MNREGA.

The Union Budget 2019 didn’t utter a word about the scheme whose allocated fund ended in December 2018 itself. It’s clear that for the next few months MNREGA will have no funding available.

Other schemes like the prime minister’s favourite Ayushman Bharat health insurance programme, the Swachh Bharat Abhiyan, etc, didn’t get any worthy funding from the Modi regime itself.

No words on employment

The NSSO data indicated that unemployment is at four-decade-high 6.1% in 2017-18, the finance minister maintained absolute and a conspicuous silence on the issue. There was no word on how the Modi regime has planned to increase employment during the budget presentation.

This refusal to acknowledge the existence of a problem is quintessential of the RSS’s staunch soldiers. Their denial is aggravating the problem and the Modi regime has no plan of action designed to tackle the menace of unemployment.

Recently, a group of NITI Ayog members like Amitabh Kant and Rajiv Kumar jumped into the fray to defend the Modi regime on the unemployment problem; however, in face of a barrage of critical questions they gave up their shoddy defence. It’s unlikely that any of the BJP top brass or the ministers of the Modi regime would dare to meet the press, or the critical part of it, on the unemployment issue.

To cover up the menace of unemployment and jobless contraction of the economy, the Modi regime is now pressing the panic button of Ayodhya repeatedly to replay the Ram Mandir rhetoric from the random rabble-rousers of the Hindutva fascist camp.

The diversionary Ayodhya issue is not paying the required dividend to the Modi regime, rather, it’s making the challenge serious before the election.

The fiscal deficit and the macro-economic problem

The Modi regime’s claim that the fiscal deficit is brought at 3.4% and the Current Account Deficit is at 2.5% is also based on forged data, alleged by Yashwant Sinha and Yogendra Yadav.

It’s estimated that the fiscal deficit will be around 3.7% despite the Modi regime’s rhetoric and there are no signs of any miracle that will clock it to less than 3.4% as per the propaganda.

Disinvestment of government’s stocks in PSUs has been an avenue for subsequent governments to milk the PSUs created with the common people’s money. However, as only the PSUs are buying the stocks of other PSUs at present, therefore, the disinvestment route is also not bringing much revenue for the Modi regime.

During this period, as the election is approaching and before the Model Code of Conduct is announced, the Modi regime is most likely to lay its hands on the reserve funds of the Reserve Bank of India. The central bank may succumb to the pressure now as Modi has deputed his ardent follower Shaktikanta Das at the helm of its affairs.

The reign of doom

Though the bull is raging in the stock markets following the interim budget, the economy is suffering the bruises of the bear’s attack. The falling real income, rising unemployment, the crisis in agriculture, the crisis in manufacturing and the rising inflation are all combining together to hurt the common people.

This Union Budget 2019 is nothing more than a bundle of lies, which violates the constitutional norms, tries to hoodwink the common people and pushes the economy to a farther crisis zone.

Modi and his coterie will use the gimmicks publicised in the Union Budget 2019 to garner support in the forthcoming election and will adjoin the bogey of communalism to his campaigning to manipulate the people’s mandate for a second term.

To battle this economic doom it’s not only enough that one must fight the Modi regime but one must also ponder over the economic problem, understand its complex character, see the larger web that connects the Indian economy with the global neo-liberal economic order, and take constructive measures to bring real and revolutionary changes in the economic field so that the people attain salvation from the reign of crisis and doom.

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