Jaitleys attempt to underplay the damage caused by demonetisation contrasts with the somewhat more sober assessment of the Economic Survey prepared by his Ministry.
THE Union Budget is only one of several instruments of economic policy available to the government. It must necessarily take into account not just the national context and the prevailing distribution of economic and political power among the various social classes in the country, but also the international context, more than ever before, given that the sum of Indias exports and imports amounts to a substantial share of the countrys gross domestic product (GDP). This years Budget, which was presented a few months after the shock and awe of demonetisation, had to contend with that move as well. Notwithstanding these constraints and taking into account the fact that the media hype over the Budget is possibly a bit over the top, the Union Budget is nonetheless very important as the total expenditure of the Union government accounts for between one-eighths and one-sevenths of the countrys GDP.
The Union Budget for 2017-18 was presented in Parliament on the first day of February instead of the last day of that month, as had been the practice for many years. The other distinctive feature this year was that the Railway Budget was subsumed within the Union Budget and not presented separately. Both these features have some negative implications. The database for the Budget is weakened somewhat by its advancement. The subsuming of the Railway Budget within the Union Budget weakens the special attention that the Railways, with its truly all-India character, deserves. Some read this subsuming as a prelude to the privatisation of the Railways.
Be these as they may, Arun Jaitleys fourth Budget as Union Finance Minister is wilfully blind to the serious negative economic impact of the demonetisation exercise imposed on the country by the Central government.
In a Budget speech that was true to form in terms of being long on rhetoric and short on substance, Jaitley hailed demonetisation as a momentous initiative and claimed that it would produce great benefits in the long run. The Minister presented little evidence to back his claim. His attempt to underplay the damage caused by demonetisation contrasts with the somewhat more sober, even if still wishful, assessment of the Economic Survey prepared by his Ministry.
The fact of the matter is that the demonetisation measure inflicted on an economy that was already showing some evidence of decline in momentum has caused considerable economic harm already, not to mention the tragic and entirely avoidable loss of more than a hundred lives. Estimates by various sources, including the Centre for Monitoring the Indian Economy (CMIE) and the All India Manufacturers Organisation (AIMO) and several independent economists, suggest substantial monetary loss and a decline of between 1 and 2 percentage points in the rate of economic growth.
Economists of widely different persuasions have shown a rare unanimity in highlighting the serious negative impact of the measure on aggregate demand in the economy. Given the damage caused by demonetisation and the consequent decline in aggregate demand, there was a general expectation that the Union Budget would provide a substantial stimulus to the economy to counteract the deflationary impact of demonetisation. However, an examination of the tax and expenditure proposals, which constitute the core of any budget, shows a failure to recognise the need for a substantial stimulus to the economy.
The Budget Estimate (B.E.) of total expenditure for 2017-18 is Rs.21.47 lakh crore as against a Revised Estimate (R.E.) for 2016-17 of Rs.20.14 lakh crore. This works out to a less-than-7 per cent increase in nominal terms. Taking inflation into account and viewed against a GDP growth estimated at 6.5-6.75 per cent, this is no stimulus at all. The total budgeted expenditure of the Union government for 2017-18 is 12.7 per cent of the GDP as against 13.4 per cent in 2016-17, a reduction in relative terms.
There is a great deal of rhetoric in the Budget speech on large increases in allocations for agriculture and farmers welfare, rural development, education and health. There is also the claim of significantly enlarged spending on infrastructure. The Budget speech suggests a thrust towards agriculture and allied activities and rural development. But the allocation for these two sectors taken together rises from Rs.167,768 crore in R.E. 2016-17 to Rs.187,223 crore in B.E. 2017-18, an increase of 11.5 per cent in nominal terms, implying only a modest increase in real terms. The allocation for education and health was Rs.114,806 crore in R.E. 2016-17. It has risen to Rs.130,215 crore in B.E. 2017-18, again a rather modest increase given the countrys overall low spending on these key sectors. The total expenditure on infrastructure as a share of Budget outlay is also marginally lower in B.E. 2017-18 compared with R.E. 2016-17.
An especially important negative impact of demonetisation has been on employment in the informal sector. There was widespread expectation that the Budget would address this issue by substantially increasing allocation for the rural employment guarantee scheme and possibly initiating a similar urban employment guarantee scheme. However, the allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in B.E. 2017-18, at Rs.48,000 crore, is barely more than the R.E. 2016-17 figure of Rs.47,499 crore. Given the increase in wages for MGNREGS work, there will be a decline in the number of days of employment per household registered in the scheme. A larger point also needs to be made. As data from the Labour Bureau surveys remind us, job creation has nosedived over the past year, and this was a key issue for the Budget to take into account. However, it has made no serious effort in that direction.
Turning to receipts, the tax proposals in the Budget are estimated to result in a loss of Rs.20,000 crore in direct tax revenues. This continues the trend under the present government of persistent tax giveaways in respect of direct taxes even while the rhetoric is about widening the tax base and increasing the share of direct taxes. What is happening is that the indirect tax burden, a large share of which is borne by ordinary working people, is rising steadily. For instance, the revised excise duty collection in 2015-16 was Rs.2.88 lakh crore as against a B.E. of Rs.2.29 lakh crore. In 2016-17, the excise duty collection was Rs.3.87 lakh crore as against a B.E. of Rs.3.19 lakh crore.
Over the last three years, we have seen the abolition of wealth tax in a country characterised by obscene wealth inequality. We have also seen repeated overtures to tax evaders even while the rhetoric around demonetisation was on wiping out black money. These steps do not enhance the credibility of the governments morality plays. In respect of corporate income taxes, there is reasonable ground for eliminating numerous exemptions. The clamour for lower tax rates on corporate profits is to be assessed against the reality of effective tax rates of hardly 25 per cent on profits accruing to large corporate entities. The several lakh crores in revenue foregone on account of concessions to robust corporate and individual entities does not speak of equity in budget-making.
The economic philosophy underlying the Budget is one which sees the state as, at best, a necessary evil, and believes that the sole path to rapid growth and social well-being is through incentivising corporate investment. It also places exclusive emphasis on so-called fiscal prudence, which is interpreted to mean minimising fiscal deficits essentially through expenditure reduction. The self-serving argument that a lowering of tax rates will lead to an improvement in compliance is not sustained by evidence from across the world. The reason is simple enough: if the marginal costs of tax evasion are perceived to be lower than the benefits from such evasion, compliance need not improve at all.
Excerpt from:
Stubborn blindness | Frontline - Frontline
- AI has perfect detection rate for severe cases of condition that causes blindness in preemies - OHSU News - March 10th, 2024
- PulseSight launches with gene therapy platform targeting age-related blindness - Longevity.Technology - March 10th, 2024
- AIOS and RANZCO Unite to Combat Preventable Blindness - Hindustan Times - March 10th, 2024
- Baby born without eyes defies the odds as she thrives despite blindness - Express - March 10th, 2024
- Penn Medicine Accelerator Program to Boost AI-Powered Projects Targeting Blindness and Cervical Cancer - India Education Diary - March 10th, 2024
- Scientists discover gut bacteria`s role in genetically-linked vision loss - WION - February 27th, 2024
- Prevent Blindness launches new Retinopathy of Prematurity Education and Support Program as part of inaugural ... - Modern Retina - February 27th, 2024
- Revolutionizing Eye Disease Treatment: The Unseen Link Between Gut Bacteria and Blindness - Medriva - February 27th, 2024
- The Virtue of Color-Blindness & The End of Race Politics: Arguments for a Colorblind America Book Review - National Review - February 27th, 2024
- Sight loss could be treated by antibiotics after being linked to gut bacteria - The Independent - February 27th, 2024
- Prevent Blindness Launches New "Retinopathy of Prematurity (ROP) Education and Support Program" as Part of ... - PR Web - February 27th, 2024
- $35 million to fight blindness with manufactured corneas | Health Portfolio Ministers | Australian Government ... - Department of Health - February 10th, 2024
- Eye care, vision impairment and blindness - World Health Organization (WHO) - October 27th, 2023
- CHOROIDEREMIA RESEARCH FOUNDATION EXPANDS RESEARCH SUPPORT INTO NONSENSE MUTATIONS OF A RARE INHERITED RETINAL - EIN News - May 1st, 2023
- Chennai eye hospital ties up with Iceland firm to adopt mathematical algorithm to predict diabetic retinopathy - The Hindu - April 23rd, 2023
- Drug-Resistant Bacteria Tied to Eyedrops Can Spread Person to Person ... - April 7th, 2023
- Prevention of Blindness Week 2023: Mumbai experts explain why you should be concerned about glaucoma and the need for regular eye checkups -... - April 7th, 2023
- Childhood blindness - Wikipedia - February 24th, 2023
- FDA Approves Syfovre (pegcetacoplan injection) for the Treatment of ... - February 24th, 2023
- Human mini brains illuminate path to curing blindness - February 16th, 2023
- Raymond V. Gilmartin: Man with a global vision - February 16th, 2023
- Why Are People So Mad About MrBeast's Blindness Video? - February 16th, 2023
- This heartwarming video of a colorblind boy seeing color for the first time will make you cry - Indiatimes.com - February 16th, 2023
- Blindness (Vision Impairment): Types, Causes and Treatment - February 8th, 2023
- CDC urges people to stop using brand of artificial tears linked to ... - February 8th, 2023
- Health News Roundup: U.S. FDA says India-made eye drop linked to some infections, blindness and one death; China records 3,278 COVID-related deaths... - February 8th, 2023
- I had two strokes at 29 and gone blind -I've been accused of faking my sight loss - Daily Mail - February 8th, 2023
- Blindness and vision impairment - World Health Organization - January 23rd, 2023
- Recovery from blindness - Wikipedia - January 23rd, 2023
- Colour blindness tests, juggling, avoiding glare: A hockey goalkeepeers quest to train his biggest weapon, eyes - The Indian Express - January 23rd, 2023
- But Did You See the Gorilla? The Problem With Inattentional Blindness ... - October 15th, 2022
- Canadians unaware of diseases that lead to blindness, survey says - CTV News Northern Ontario - October 15th, 2022
- A Review of Corneal Blindness: Causes and Management - Cureus - October 15th, 2022
- A cure for blindness may be first product made in space - Freethink - October 15th, 2022
- Is MrBeast trying to cure 1000 people's blindness? - indy100 - October 15th, 2022
- Early detection and management is the key to prevent glaucoma related blindness: Experts - Express Healthcare - October 15th, 2022
- As World Sight Day Nears, River Blindness is Fading - SaportaReport - October 15th, 2022
- Tears of happiness: How curing blindness in Dolakha saved a girls future - City A.M. - October 15th, 2022
- World Sight Day: Orbis, UC Davis team up to train eye care teams from Latin America to fight avoidable blindness - Ophthalmology Times - October 15th, 2022
- Juan Williams: The GOPs epidemic of intentional blindness - The Hill - October 15th, 2022
- Charles pays tribute to Malawi's elimination of disease causing blindness - Express & Star - October 15th, 2022
- Coping with calamity: Former NYT columnist Frank Bruni on blindness and vision, at Morristown book fest keynote - Morristown Green - October 15th, 2022
- Sighting solutions in a world of vision for weavers - The New Indian Express - October 15th, 2022
- Blindfold run raises $40,000 for the MUHC Foundation to support glaucoma care at the MUHC - StreetInsider.com - October 15th, 2022
- MacKenzie Scott Donates $15M to Address the Eyecare Needs of the Impoverished - InvisionMag - October 15th, 2022
- Astellas and MBC BioLabs Announce Astellas Future Innovator Prize to Help Biotech Start-ups Accelerate Early Drug Discovery and Research Efforts -... - September 20th, 2022
- Treating cataracts before 'critical age' imperative FBC News - FBC News - September 20th, 2022
- GenSight Biologics to Present at Upcoming Industry and Investor Conferences - Business Wire - September 20th, 2022
- Ashton Kutcher battled vasculitis causing blindness, loss of hearing. Know all about the rare condition - India TV News - August 11th, 2022
- Prevent Blindness Is Recognized as a Healthy People 2030 Champion for Supporting the Initiative's Vision - Vision Monday - August 11th, 2022
- Researchers make progress toward a stem cellbased therapy for blindness - Ophthalmology Times - August 11th, 2022
- The strategic blindness of Israel's caretaker government - JNS.org - August 11th, 2022
- UND professor carries the torch for UND studies of visual impairment and blindness - Grand Forks Herald - August 11th, 2022
- Karan Nagrani is using social media to raise awareness about the 'spectrum of blindness' - ABC News - August 11th, 2022
- Vision impairment and blindness related to NCDs: Fong - FBC News - August 11th, 2022
- Strategic blindness of caretaker government - The Jewish Star - August 11th, 2022
- Massachusetts woman blinded by attack working to help others regain sight - WCVB Boston - August 11th, 2022
- Persuasion Film Review: Is Heterogeneous Casting Race-Inclusionary Or Escapist? - Feminism In India - August 11th, 2022
- Is It Time To Start Using Race And Gender To Combat Bias In Lending? - Forbes - August 11th, 2022
- The journey of Kali Yugi started with the mistake of objectives! - Youthistaan - August 11th, 2022
- A 50-State Review of Access to State Medicaid Program Information for People with Limited English Proficiency and/or Disabilities Ahead of the PHE... - August 11th, 2022
- iHealthScreen Completed Prospective Trial of AI-Based Tool for Age-Related Macular Degeneration (AMD) Screening and Submitting the Results to FDA for... - August 11th, 2022
- Vitamin B12: Why You Need It & Foods To Increase Your Vitamin B12 Intake - NDTV - August 11th, 2022
- Jack Levine: Remembering a dad who proved that even in blindness, there can be vision - The Florida Times-Union - June 26th, 2022
- Potion of Blindness | Minecraft Ideas Wiki | Fandom - June 26th, 2022
- Tightening a molecular "zipper" could help prevent hereditary blindness - New Atlas - June 26th, 2022
- What's the Link Between Glaucoma and Dry Eyes? - Healthline - June 26th, 2022
- Lisa Durden's upcoming documentary "Blind Divas" follows Krystle Allen and Naquela Wright-Prevoe, two Black women entrepreneurs, determined... - June 26th, 2022
- Trump election lies may fit legal concept of willful blindness - Chicago Tribune - June 26th, 2022
- Sightsavers relaunches its thematic strategy The Sun Nigeria - Daily Sun - June 26th, 2022
- Trachoma elimination: millions more to benefit from donated azithromycin - World Health Organization - June 26th, 2022
- Dangers of super gonorrhoea from infertility to blindness as global warning issued - Daily Star - June 26th, 2022
- Fifty years of Title IX: What is it, what does it cover and do we still need it? - The Athletic - June 26th, 2022
- How The SMH Got That Rebel Wilson Story So Wrong - Junkee - June 26th, 2022
- The Week That Was: All of Lawfare in One Post - Lawfare - Lawfare - June 26th, 2022
- Why Brad Pitt quit smoking and drinking altogether during the pandemic - BusinessGhana - June 26th, 2022
- Watch your eye - The New Indian Express - June 26th, 2022
- Olivia Brouwer's art is for everyone to see and touch - Hamilton Spectator - June 26th, 2022
- Monkeypox may not mutate as fast as coronaviruses, but that doesn't mean it can't adapt to its new hosts - The Conversation - June 26th, 2022
- Former American Express Foundation President Takes Helm of Signature Theatre - The Chronicle of Philanthropy - June 26th, 2022