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Demystifying the process: Budget 2016

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By Amit Kapoor

New Delhi: The course of fiscal policy of the government is decided by the budget, which is an important document. This year too seems to be kick started with the halwa ceremony, renowned for commencing the printing of the budget documents on February 19.

Another unique feature of this year’s budget is that some of the key officials have communicated through a series of videos that aim to demystify the budgetary process. These videos also give a flavor about the essential features of the upcoming budget to be presented by FM Jaitley on February 29.

The key officials that have spoken before the budget announcement include the finance minister, the minister of state for finance, and the revenue and the economic affairs secretaries – and all have made some crucial points relating to the budget 2016.

The finance minister, in his interactions, had mentioned the use of technology to the advantage of all taxpayers. Already some 1.4 crore people have been notified of the budget refunds through the technology platforms and their refunds have been processed through the same medium. Roughly 90 percent of the budget filings are done online, and this is where the power of technology is making the tax process smooth and efficient.

The minister of state for finance, in his interaction, has mentioned that the budget will aim to reduce poverty, provide prosperity to farmers, help in job creation for the young people of the country and provide a better quality of life to all citizens. He also expressed his belief that India will continue to be a beacon of growth and stability in a very turbulent global environment.

The economic affairs secretary tried to demystify the budget process and mentioned that it is a long-term process as opposed to the common conception. It generally starts in September with a detailed circular being issued to all the ministries. Post this, in November and December, the Department of Expenditure holds meetings with various ministries about the requirements in the current and the next years.

At the beginning of January, the Department of Revenue makes its forecasts for the current year and the next year. There are the revised estimates for the current year and the budget estimates for the next year. Post this once the revenue and expenditure proposals converge, the finance minister holds consultations with various stakeholders and proposals are concretized at the end of January. Decisions are then taken and post this followed by printing of budget documents.

The economic affairs secretary also alluded to the fiscal deficit and how the government is looking at it. He too was upbeat about India’s performance amid global turbulence and said that budget has to focus on growth as it leads to job creation and economic development.

The revenue secretary, in his interaction, mentioned taxation and the broad structure of the budget. He stated that the total tax revenue projection is Rs.14.4 lakh crore. The income tax revenue is close to about Rs.7.9 lakh crore and the indirect tax revenue is close to Rs.6.5 lakh crore.

Within the income tax, there are two components – the corporate income tax and the personal income tax. The corporate income tax is around 59 percent while the personal income tax is around 41 percent.

On the indirect side, there are three major components: excise duties, customs and service tax. Normally these are roughly the same contribution, but this year, due to the oil duty, the excise duties are close to 39 percent while the other two form the remaining indirect taxes.

The service tax structure is diversified, which is a good thing. The direct side seems as having a shortfall of about Rs.40,000 crore as corporate earnings have been low but this will be compensated by the indirect side which is buoyant. The revenue secretary also alluded to ways and means to reduce the litigation that has been seen as a perennial problem for India’s corporate sector.

In the week ahead, a lot of haze will get cleared on the issues pertaining to the budget. The new media strategy seems to be a good initiative leading up to the budget. Overall the stage is set for a historic budget. It is also hoped that the government succeeds in the balancing act when Finance Minister Arun Jaitley presents the budget in the Lok Sabha at 11 am on February 29. (IANS)

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Sri Lanka On The Brink of ‘Economic Anarchy’

Sri Lanka will have issues on accessing government money if the stalemate is not resolved by the end of the year.

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Sri Lanka
Members of a civil society group attend a silent protest to demand democracy, after Sri Lankan opposition leader Mahinda Rajapaksa was appointed prime minister when President Maithripala Sirisena dismissed Ranil Wickremesinghe, in Colombo, Sri Lanka. VOA

Two men each claim to be the prime minister. Lawmakers are exchanging blows in Parliament. A former finance minister says Sri Lanka is on the brink of an “economic anarchy.”

Welcome to Sri Lanka, where the political crisis is getting worse by the week.

The trouble started when President Maithripala Sirisena, fed up with disagreements with his prime minister over money, an alleged conspiracy plot and unresolved issues of wartime crimes against civilians, fired Ranil Wickremesinghe and his Cabinet and replaced them with a government headed by a popular former strongman, Mahinda Rajapaksa.

But lawmakers balked and twice passed a no-confidence motion. Sirisena, however, refuses to accept that his choice of prime minister has been defeated.

Sri Lanka, parliament, political
Sri Lankan President Maithripala Sirisena waves to supporters during a rally outside the parliamentary complex in Colombo, Sri Lanka. VOA

Sirisena government can’t be legal

Jehan Perera, head of the local analyst group National Peace Council, said that the government appointed by the president can’t be called legal because Sirisena had not sought a parliamentary vote when he dismissed Wickremesinghe.

“It can be called illegitimate because provisions for a confidence vote in Parliament are being blocked by the president’s own party through their riotous behavior,” Perera said, referring to a brawl last week that was followed by another pandemonium in the chamber when Rajapaksa loyalists refused to let the speaker conduct proceedings.

Wickremesinghe says his dismissal is invalid because he still holds a majority in the 225-member Parliament. The dismissal is also disputed because of the latest constitutional change, which lawyers say has taken away presidential powers to dismiss the prime minister.

sri lanka, parliament
Sri Lankan former President Mahinda Rajapakse addresses journalists at his residence in Colombo, Sept. 22, 2018. Rajapakse has been appointed the Sri Lanka’s new prime minister. VOA

Life goes on

Despite all the drama and two rival prime ministers, life hasn’t collapsed, thanks to the efficient bureaucracy that keeps the wheels of administration turning.

Even though there is no Cabinet recognized by Parliament, and despite warnings by Wickremesinghe supporters that state officials should not take orders from an “illegal government” of Rajapaksa, bureaucrats continue to work with the president who is the chief executive and the ministers appointed by him, officials said on condition of anonymity because they are not authorized to speak to the media.

Budget dilemma looms

However, decisions regarding new projects or purchases involving large sums of money are on hold.

The absence of a recognized government has delayed the budget for 2019. Mangala Samaraweera, who was finance minister in Wickremesinghe’s Cabinet, said that there will be no legal way of spending money in the coming year without a parliament-approved budget.

sri lanka
Sri Lanka’s ousted Prime Minister Ranil Wickremesinghe reacts during a news conference in Colombo, Sri Lanka, VOA

Sri Lanka’s Constitution says that control over public finances lies with Parliament and no funds can be released without a warrant signed by the finance minister and approved by the legislature. That means all government payments starting from January can be deemed illegal, Samaraweera says.

Sri Lanka is on the brink of an “economic anarchy and chaos as never experienced before.”

“The cavalier and irresponsible actions of the president … based on personal animosities and precipitating a series of illegal acts, places at risk Sri Lanka’s ability to meet its immediate debt obligations,” he said.

Sri Lanka has to repay $1 billion of its foreign loans in early January, which is also in the prerogative of Parliament to approve.

Sri lanka
Sri Lanka’s former President Mahinda Rajapaksa, front left, is sworn in as prime minister before President Maithripala Sirisena in Colombo, Sri Lanka. VOA

Wickremesinghe’s lawmakers have presented a motion to the speaker seeking to block funding to the prime minister’s office, which if passed, would curtail Rajapaksa’s functions.

“As far as the people are concerned, they are witnessing the normal functioning of the country,” insisted government spokesman Keheliya Rambukwella.

Also Read: Regional Political Turmoil Reflects India-China Rivalry

However, he conceded that Sri Lanka will have issues on accessing government money if the stalemate is not resolved by the end of the year. Sirisena called snap elections for Jan. 5, but the opposition challenged the decision, and the dispute is in court. (VOA)