'India a tax-free country? Not even in distant future!'

Budget 2014, as an eminent columnist said, was not a bang but not a whimper either.

Finance Minister Arun Jaitley stressed on growth while he presented the Budget in the Lok Sabha this year.

What effect will the Budget have on the lives of the common people?

Will it let them save more?

Will the Budget cut down on inflation?

Eminent business journalist and author Tamal Bandyopadhyay discussed these issues with rediff.com readers during a live chat on Tuesday, July 15.

Here is the transcript:

PRADIP PATIL

hi Sir

Tamal Bandyopadhyay

Hello: I am here. Shoot....

Vinay Shukla

Sir, to me the Budget seemed very drab. It does not have much for the aam aadmi. Your comments

Tamal Bandyopadhyay

Indeed it's boring and pretty long. Does not look very imaginative and there aren't too many big-ticket announcements except for hike in FDI in insurance and defence sectors. But there are things like income tax relief, more tax benefit on interest on home loans, etc that will have positive impact on aam admi.

Rajan sha

What immediate steps do you think the government should take to improve the condition of the masses?

Tamal Bandyopadhyay

Rajan: This is only the beginning. Jaitley will present at least four more Union Budgets. So, treat this as a starter. I am sure he will serve the main course in coming years. Through a series of small measures he is trying to create an echo system of change and inclusive growth.

chandekar muley

Apart from a few token provision like the Rs 100-crore allocation for the Sardar Patel statue and a few crores for cleaning up the ganges, did the budget have anything substantial for the aaam aadmi?

Tamal Bandyopadhyay

Yes. Quite a few. People who are earning more than Rs10 lakh a year, will get extra Rs35,000 crore in terms of tax saving once the finance bill is passed. That's the most concrete measure that will have a positive impact -- will give people more money.

Satish Pulli

Do you think the tax measures taken by Jaitley are enough?

Tamal Bandyopadhyay

He has not touched personal income tax and corporate tax. Excise duty exemptions on car continues. Raised excise duty on cigarettes... The two key measures that can change the nation are GST and direct tax code. He hasn't done anything on them. Hopefully, we will see him acting on the due in his next Budget

Amol Chille

Sir, how will the budget impact the salaried class?

Tamal Bandyopadhyay

Amol: As I have mentioned, for a person who earns Rs10 lakh a year, the gain will roughly be Rs35,000.

Suman Singh

How should those who gain from exemptions in income tax, exemption hike in interest on home loan and hike in PPF amount from 1 lakh to 1.5lakh spend/save/invest their money?

Tamal Bandyopadhyay

Suman: I can tell you how to spend but can discuss where to invest. First thing, the Budget has lifted the cap in PPF saving from Rs1 lakh to Rs1.5 lakh. That's definitely a good avenue. One can have a bite of equity also -- through mutual funds if one doesn't understand stock market. Market may record handsome gains in next three years. It's time to nibble in stocks

Max

What acording to you were the top 5 and worst 5 budget proposal s by Arun Jaitley?

Tamal Bandyopadhyay

Max: Lifting of FDI cap in insurance and defence is important. His focus on entrepreneurship and changing the matrix in which business is done in India is pretty good. He has offered goodies to salaried class in the form of higher tax exemptions.On the flip side, he hasn't done anything concrete on GST and Direct Tax Code. He has also not done anything on GAAR.

AUM

Subsidies should be withdrawn every quarter,may be spread over 3-4yrs period.This should hv been made very clear in the form of statement by the FM.

Tamal Bandyopadhyay

I agree with you. Jaitley has not made any specific commitment on the subsidy front but the fact that he has give a three year road map from fiscal consolidation makes me believe that he will take care of subsidy issue as otherwise fiscal consolidation cannot be achieved

Hardik

Do you think the govt should go the whole hog in ending subsidies on food items and fuels? Or should they do it in the piecemeal way just like P Chidambaram?

Tamal Bandyopadhyay

Hardik: Govt must have a plan to cut down subsidies. Between 2009 and 2005 fiscal years, subsidies as a percentage of GDP has grown manifold while capital expenditure has been coming down. Jaitley must have concrete plan to pare subsidy and make sure it reaches the right people

Kavita Bavekar

How would you rate Mr Jaitley's budget proposals on a scale of 1 to 10?

Tamal Bandyopadhyay

Kavita: I would give him 6

Rahul

What are the major impediments in the implementation of GST in India? How could the govt reduce the losses that the states are likely to incur if GST is implemented?

Tamal Bandyopadhyay

Rahul: Discussion on GST has been on for years, right from Pranab Mukherjee's time but the progress has been slow as it is not easy to convince the state governments. Modi has started talking to states and I am reasonably sure he will work out a formula acceptable by the states

Aditya-Misra

How is the budget going to help the poor of the country who are not salaried, who are daily wage labourers, or jobless poor. How are the changes in MNREGA going to help the rural poor and how are they going to affect the migration of labourers to the cities.
Tamal Bandyopadhyay

Aditya: we need to understand that Jaitley will present at least four more budgets and he cannot do everything in his maiden budget, presented after six weeks. This budget has tried to create an ecosystem for inclusive growth. I am sure he will carry it forward with precision in next budgets

Dananjaypuri

P Chidambaram, after the budget, said that his stand of containing fiscal deficit stands vindicated. What did he mean by that?

Tamal Bandyopadhyay

Dananjai: I guess what Chidambaram meant is his math on fiscal deficit remained unchanged and that's a vindication of his stance. In the February interim budget, former FM kept the fiscal deficit target at 4.1%. Jaitley says it is difficult to achieve but has not changed the figure

Hitansh

5 major reforms the FM could have initiated to get the growth bandwagon on a roll...

Tamal Bandyopadhyay

Hitansh: here are my takes on five key reforms: GST, Direct Tax Code, land reforms, labour reforms and financial sector reforms

Janu

The Budget does not benefit the common man apart from a few tax relaxations. Shouldn’t the finance minister have had announced welfare schemes?

Tamal Bandyopadhyay

Janu: We are in a big fiscal mess because of high subsidies (which do not reach the poor) and mindless welfare schemes. We need inclusive growth but the schemes will have to be well thought out and well executed.

Jignesh Shah

Please tell us budget effect on banking sector

Tamal Bandyopadhyay

Jignesh: Banks will be allowed to float long term bonds to finance infra sector. The funds will not attract SLR, CRR and such loans will not be subjected to priority sector loan norms. Govt stake in banks will not come down below 51% but banks will raise money from market offering stakes to retail investors.Budget also hinted at restructuring PSU bank boards, making management more responsible

Abdul Warith

In an interview post Budget, Jaitley said, ‘this is the best that I could do’ Do you agree?

Tamal Bandyopadhyay

Abdul: Which FM will say he could have done better? This is the best, according to Jaitley. You need to factor in two things -- he had six weeks to prepare the budget and this is one of the five budgets he is expected to present. So, don't lose heart. He can do better

AUM

Why no very attractive & fruitful Amnesty Scheme declared in this budget, to get the unaccounted money back in main stream economy ?

Tamal Bandyopadhyay

The government has made it clear that they will take care of the black economy. I am sure we will see steps to unearth black money. Everything does not need to be include in budget. The rail fare hike happened outside rail budget

Aditya-Misra

Don't you think availability of more cash in the hands of the large middle class will result in price rise?

Tamal Bandyopadhyay

Aditya: Theoretically, more cash in hand can trigger higher inflation but Rs35,000 extra cash in a year isn't too much to cause inflation. A subnormal monsoon which could lead to a drought is a bigger worry as that will lead to rise in food prices and fuel inflation. Oil price is the other thing to watch out for

Manan Dwivedi

what is there for salaried person in the budget??

Tamal Bandyopadhyay

Manan: Income tax relief; lifting of cap in investment in PPF and more tax benefit on interest of home loans. All put together, the net gain for a person who earns Rs10 lakh a year is Rs 35,000

Sandeep Saha

Govt started to cut back on fuel subsidy. How will that impact inflation? what is your inflation forecast for next 2-3 years?

Tamal Bandyopadhyay

A committee appointed by RBI has crafted a glide path for consumer inflation -- 8% in January 2015 and 7% in January 2016. RBI has accepted this. Monetary measures along cannot contain inflation in an economy like ours. The govt needs to be proactive to tackle food inflation by better supply chain management and attacking the horders

LOCA

Why government is not privatizing Railways except Stations and infrastructure? It will be game changer in terms of fare, facility and outreach to remote parts. If security is concerned, it can start with few government undertaking on similar lines of petroleum ....for transportation of goods and peopl....

Tamal Bandyopadhyay

Agree with you Loca. Indian Railways and Indian Airlines are both prime subjects for privatisation but you will admit this is a politically extremely sensitive issue. One needs courage to do this

Nayan

How can you justify the 200-crore statue proposed in the Budget?

Tamal Bandyopadhyay

Nayan, it's difficult to justify but Rs200 cr is no big deal if you consider the size of Indian economy -- world's third biggest in terms of purchase power parity

AUM

Can India become a Tax Free country ,may be not now immdtly,but may be after 4-5 yrs from now.Your honest views.

Tamal Bandyopadhyay

My honest view is: not even in distant future!

Rangan Sengupta

The Income tax exemptions are more cosmetic than actual relief for the salaried middle class. Ability to Pay approach to taxation is overlooked through such IT sops. The government could slap an expenditure tax system with higher level of taxation for purchases on luxury items. The IT exemption limit could be raised to 10 lakh per annum. Financial institutes etc.

Tamal Bandyopadhyay

Rangan: Taxing the rich and wealthy is something that the government has been mulling for years now. Chidambaram took a close look but nothing happened

Avinash Gaikwad

How Rs. 5150 save as exemption increase to Rs. 2.5 lacs. I t should be Rs.5000 save

Tamal Bandyopadhyay

Avinash: The combination of measures (lifting the ceiling on non-taxable income, higher investment in PPF, higher tax benefit on interest of home loans) will translate into Rs35,000 flow into an individual's pocket if she/he earns Rs10 lakh a year

Aditya-Misra

Would the Rs.500 crore budgeted for meeting the price rise be enough to actually help in controlling the prices of essential goods? What are your views on this idea of creating a menhgai fund?

Tamal Bandyopadhyay

Aditya: This is a tricky are and we need a host of measures to take care of price rise -- overhauling the APMC Act, supply chain management, attacking the horders,taking a relook at the concept of minimum support price and so on.

Please click here for the Complete Coverage of Budget 2014 -15