Eye on the main chance
Sir — Thousands may die if the war in Iraq does happen — but all our left parties care about is how to bend the situation to their advantage (“US gum to paste fringe groups to Left Front”, March 3). The proposal of the Left Front chairman, Biman Bose, to hold a united left rally against the American policy on Iraq does not have even a whiff of humanitarian outrage or of ideological opposition of the kind that recently animated the thousands who took to the streets all over the world. For the Communist Party of India (Marxist) in West Bengal, nothing matters more than the need to put up a show of left unity. Not real unity of course, because the CPI(M) has deviated too far from its ideological agenda to backtrack, and neither does it seem to want to. All it cares about are electoral equations and staying in power, since the rising dissatisfaction among the smaller constituents of the Left Front threatens to split it. One political party is almost as bad as the other in our country, but the left parties take the cake when it comes to cynical opportunism .
Seema Dasgupta, Calcutta
Sir — Jaswant Singh’s maiden budget focuses on the country’s fundamental strengths and the positive aspects of the current economic scenario. It focuses on biotechnology, textiles and information technology — sectors in which India has the potential to become a major global player.
The corporate sector will have something to cheer about in measures like the removal of the mandatory minimum export obligation of Rs 20 crore for companies who want to get exemption from customs duty, simplification of tax procedures, and a reduction in the surcharge on corporate tax. These will hopefully lead to an increase in the investment on research and development, thus bringing better technology to consumers. On the infrastructure front, the Rs 40,000 crore allocation for roads will give an impetus to employment and growth in rural areas. Allowing banks to buy back government securities and thus write off non-performing assets, will help to improve the balance sheet of weak banks.
The budget takes the reforms process ahead, at the same time ensuring the support of the salaried class by enhancing the standard deduction, retaining the sops on housing loan and doing away with the income tax surcharge. The budget also has something for the physically disabled. Apart from enhancing the income tax deduction to Rs 75,000, it reduces customs duty on hearing aids, wheelchairs, and so on. Senior citizens will have reasons to cheer in the new pension policy announced which will have an assured annual return of nine per cent. Further, Singh has also taken measures to boost healthcare, education through measures like tax benefits and lower customs duty. On the flip side, however, value-added tax has been introduced without compensating the states for loss of revenue.
Masood Mohammed Sohail,
Sir — Jaswant Singh should have paid more attention to the rising inflation. In this regard, the return of leave travel allowance for government servants will not help matters. While the salaried class may be thankful for the rise in standard deduction, it is going to feel the pinch from the increase in the duties on edible oil. Students will also be affected by the hike in service tax on cyber cafes. Thankfully, there are some benefits for senior citizens, with the income tax exemption being raised to Rs 1.83 lakh. But the interest rate on public provident fund should not have been lowered, since the PPF continues to be the favoured investment instrument in the country. But the best thing to happen in the budget is the abolition of the dividend tax. This will certainly help to lure investors to the stock markets.
Bijoy Ranjan Dey, Tinsukia
Sir — Jaswant Singh has announced taxes on perquisites of various kinds. This is a draconian step for those in the middle class who are honest — the corrupt will, of course, be as unaffected as ever. Why doesn’t Singh extend this measure to legislators with their innumerable perks' After all, charity should begin at home.
A.K. Brahmo, Calcutta
Sir — This year’s budget is bad for the masses. Investors with post office monthly income schemes will suffer as a result. Non-productive expenditure should have been reduced instead to garner resources. Even worse, there may be harsher measures after the elections in the states.
Sudarsan Nandi, Midnapore
Sir — Political constraints prevented Jaswant Singh from taking tough measures in keeping with economic realities. The budget thus continues with an irrational tax-structure, and the gimmickries of income tax exemptions and surcharge. The principle of a three-tier excise structure at 8, 16 and 24 per cent has for some strange reason not been applied to the textiles industry. In keeping with the Kelkar committee’s advice to abolish exemptions, the finance minister could have retained only the one on housing loans. Also, the income tax surcharge should have been totally eliminated instead of raising it to 10 per cent for incomes above Rs 8.5 lakh. Singh should also have announced drastic cuts in administrative and legislative expenses. He could also have maintained the interest-rates on savings schemes by abolishing the commission paid to agents. Investments in tax-saving devices like bonds, PPF, National Savings Certificate, and so on, could be made available at the branches of nationalized banks and post offices. Also voluntary and honest compliance of tax-laws should have been encouraged with the help of stringent measures.
Subhash C. Agrawal, Delhi
Sir — In stead of providing any relief, this year’s budget has only added to the miseries of the salaried class and interest-earning pensioners. With the exemption limit remaining the same and a token increase of Rs 5,000 in standard deductions on income beyond Rs. 1.5 lakh, this section has been made to bear the loss of one per cent interest on the PPF and other small saving schemes. Since the maximum ceiling of the amount qualifying for tax-rebate under section 88 has not been increased, the proposed rebate on expenditure on children’s education does not mean much. The interest rate cut will further reduce the income of pensioners while the rise in service tax from five to eight per cent is going to inflate their telephone and other bills. Besides, the proposed pension scheme has no meaning for existing pensioners. From where will they get the lump sum to invest in it' Raising the tax rebate from Rs 15,000 to Rs 20,000 is also irrelevant for those who already have nil tax-liability and whose income is fixed.
M.C. Joshi, Lucknow
Sir — With this budget, Jaswant Singh wants to stir the markets and enthuse the consumer with an eye to the forthcoming assembly polls in 12 states. Scrapping the dividend tax will improve sentiments for high-dividend-yielding companies, while the removal of long-term capital gains tax augurs well for equity markets. These sops may have excited the capital markets, but I suspect they will not have the desired bullish effect on share prices given the mounting tension in west Asia, which continues to dampen global sentiment.
Last but not the least, a high economic growth rate requires high domestic savings and investment. Unfortunately, the budget appears to discourage savings by slashing interest rates by one per cent, in the fond hope that the savings will flow into equity.
Sankar Lal Singh, Calcutta
Sir — The Union budget 2003-2004 has sops for the organized sector (the service classes) and deprives the unorganized sectors, especially in the villages.
What is the use of the reduced excise duty on motor cars and airconditioners' The number of cars in the country has increased manifold in the last 10 years and Indian roads cannot accommodate any more cars now. It would have been better if the sops had been given to public transport. Further, increase in use of air-conditioners will lead to increase in power consumption and pollution. Excise duty on cement has been increased to 30 per cent, and this will only hit the common people. The poor will also be affected by the additional tax on petrol and diesel or by the reduction in the import duty on foreign liquor.
While the Employees’ Provident Fund interest has been kept at 9.5 per cent, the interest rate for PPF, which is what the common people (not service-holders) invests in, has been reduced to 8 per cent. The cost of the additional interest for EPF is borne by taxpayers, which is a form of subsidy. The duty of the government is to effectively distribute its revenue-earnings from citizens in such a fashion that wealth is distributed widely and the consumer-base in the country increases throughout the country. The budget miserably fails to do this.
Hara Lal Chakraborty, Calcutta