Budget (French word – Bougette : Leather bag)
Government's view of the economy could be summed up in a few short phrases: If it Moves, Tax it ; If it keeps Moving, Regulate it; And if it stops moving, Subsidize it.
Union Budget 2021 finally presented by Finance Minister Nirmala Sitharaman on February 1, 2021.Amid concerns over the serious impact of coronavirus (COVID-19) on India’s GDP growth during last year, all people particularly economists, and investors had their eyes on the day when the Union Budget will be tabled in the Lok Sabha. As per the rituals, this year also before budget, the customary ‘halwa ceremony’ was held on Saturday at the Union Finance Ministry headquarters at North Block in New Delhi. It was happy moment for all the people as on the occasion, honourable Finance minister Sitharaman madam launched the “Union Budget Mobile App” for easy access of Budget documents. The Economic Survey 2020-21 was tabled in parliament by Finance Minister Nirmala Sitharaman on the first day of the Budget session. Various topics such as economic growth, fiscal budget, banks consolidation ,Banking , PSU Divestment were analysed through the economic survey survey, authored by Chief Economic Adviser Krishnamurthy Subramanian..The economic survey projected a growth of 11 % with focus on recapitalisation and privation of PSU banks in 2020-2021. The economic survey suggested for a fresh asset quality review of Indian banks as soon as the Covid-19 relief measures are lifted. Every year union budget is presented with lot of hue and cry before and after the presentation. So Lets try to understand what is budget in simple language? It is an annual statement that details government finances. It is the summary of revenue and expenditure of a fiscal year. It aggregates income from all sources(taxes, duties, borrowings) and expenses. It also offers estimates for the next financial year. Budget-Who makes it? : Budget making is a consultative process that involves the finance ministry, the planning commission and all other ministries. The budget division, which is a part of the department of the economic affairs prepares the budget after the planning commission and finance ministry issue the spending guidelines, Ministries prepare their demands based on these guidelines. Once it is passed by the parliament, the president signs it into an act.Budget –The process:, Budget division prepares a draft document in consultation with Ministries , which indicate requirement of various stake holders. After consultation with prime minister Finance minister approves draft, then he briefs other ministers through a summary of the cabinet ,Finance minister presents budget in the Lok Sabha. It has 2 parts- a) General economics survey of the country and the policy statements. b) Tax proposals, Annual financial statement is given to Rajya Sabha and discussions are held in the parliament..Grants are approved ,Appropriation Bill, Finance bill introduced in Rajya Sabha,Then the union budget is approved.
Bougette : Leather bag,secrecy angle: In the run-up to the Union Budget, the number-crunching officials are isolated in a finance ministry to keep key figures a secret. What adds to the drama of the Union Budget every year is the secrecy angle. The ‘lock-in’ most exciting scene in the Budget, wherein, number-crunching officials are locked up in a North Block (finance ministry) to keep key figures a secret. ‘lock-in’ scene are the 100-odd technical staff drawn from the government printing presses. Budget Press of the North Block basement, where there are two printing machines. The ‘lock-in’ of the printing staff starts around February 20. Apart from secrecy, the ‘lock-in’ serves another underlying purpose — that of enabling work uninterrupted, 24x7. It’s virtually a hostage situation. No phone calls and no contact with the world outside. There is just one phone line on which the printers can receive calls. That, too, only in the presence of an intelligence official. —for the prints or the ‘proofs’ cannot be taken out of the press. These prints, in the form of Budget documents, will come out only on D-day — rather, on the eve of the Budget day. They are taken to Parliament at night, and the contents shared with the Press Information Bureau. when the finance minister makes her much-awaited Budget speech in Parliament .The budget always try to balance the objectives of stimulating growth and managing fiscal deficit. There are five main heads classified for tax payers such as 1) Salaries people 2) Investors paying taxes on deposits and securities 3)taxes on house property 4. Capital gain 5)Income from Business and Profession. As per fiscal policy government tries to provide budget by considering the fiscal deficit and forex, as GDP can be increased by Consumers spending, Investments, government spending’s, imports and exports of country .so one side the trade of payment of country is considered for balancing country’s overall financial position and other hand stimulus is being provided for increasing consumers spending and ultimately then increasing manufacturers revenue. Lets understand what is Balance of payments for our country : The total money come into a country from abroad less money going out of the country during the same period. The way balance sheet is prepared for company, similarly the country’s balance of Payment is prepared with two accounts :Current account and the Capital account. We believe one of the sectors that require focus in the economic development is education. The pandemic and lockdown disrupted the sector to a great extent, as school and colleges were the first one to shut and last one to open due to lockdown. The current expenditure on education is around 4.5 % of GDP and research and innovation investment, is 0.8% of GDP needs to be enhanced to at least 7% and 2 to 3% of GDP respectively .For following this new norm of education and conducive learning atmosphere, government needs to increase funds allocated to education sector for smooth implementation of New Education policy. For technological advancements FDI in education is essential. The pandemic has impacted all sectors and businesses of all sizes. While some industries have seen a bit of turnaround in the past, it is essential to have policies that will enable ease-of-doing-business. Increased loan limits for unsecured loans, will help small businesses to have better access to credit and working capital. Hassle-free loan disbursements, automation of tax and compliance, paper-less approvals, and incentives to adopt digital banking practices will be critical changes to look for. The manufacturing MSME sector which is an engine to the growth of country and is an important impetus for the GDP growth so different packages that will stimuli their business as many are facing liquidity problems due to the long breakdown in the country in few sectors.
The budget always try to balance the objectives of stimulating growth and managing fiscal deficit. There are five main heads classified for tax payers such as 1) Salaries people 2) Investors paying taxes on deposits and securities 3)taxes on house property 4. Capital gain 5)Income from Business and Profession. Every class of taxpayer has some or the other expectations from union budget as each one in interested to know how much tax he or she can save from his/her income.. As per fiscal policy government tries to provide budget by considering t the fiscal deficit , forex, and impetus for increasing exports, as GDP can be increased by Consumers spending, Investments, government spending’s, imports and exports of country .so one side the trade of payment of country is considered for balancing country’s overall financial position and other hand stimulus is being provided for increasing consumers spending and ultimately then increasing manufacturers revenue.
Being from education sector, we believe one of the sectors that require some focus in the upcoming Union Budget 2021 is education. The pandemic and lockdown disrupted the sector to a great extent, as school and colleges were the first one to shut and last one to open due to lockdown . Students and teachers were not prepared for the sudden shift to online forms of teaching and learning. This new normal in education calls for a renewed focus and investments in order for our educational institutions to be at par with their global counterparts. The current expenditure on education in India is around 4.5 % of GDP. This needs to be increased to 7-8 % of GDP Similarly, the research and innovation investment, which currently stands at about 0.8% of GDP needs to be enhanced to at least 2 to 3% of GDP. There is also need for facilities that will help in easing the challenges faced by students with learning disabilities. For following this new norms of education and for conducive learning atmosphere, government needs to increase funds allocated to education sector and can provide various grants and financial assistance that will help in smooth implementation of New Education policy. FDI in education is another important aspect the forthcoming budget which needs to address. For technological advancements FDI in education is essential.
As a salaried employees ,we also hope, Income tax slab for individuals to be optimized, tax on income of more than 5 Lacs is Rs 12,500/- it should be reduced for lower-income group people. The maximum amount of deduction under u/s 80C is being long due for increase from 1,50,000/- to 3,00,00 as this deduction will help lot of lower and middle class income group people. Tax deductions need to be simplified to benefit all home-owning taxpayers. Currently, homeowners get deductions under 80C, 80EE and 80EEA. These can be clubbed into a single tax section focused only on home loan payments–both interest and principal.
The pandemic has impacted all sectors and businesses of all sizes. While some industries have seen a bit of turnaround in the past few months, it is essential to have policies that will enable ease-of-doing-business in this new order, while allowing small businesses to prosper. It would be desirable to have increased loan limits for unsecured loans, thereby helping small businesses have better access to credit and working capital. Hassle-free loan disbursements, automation of tax and compliance, paper-less approvals, and incentives to adopt digital banking practices will be critical changes to look for. The manufacturing MSME sector is an important impetus for the GDP growth of our country so we look forward for different packages that will stimuli their business as many are facing liquidity problems due to the long breakdown in the country in few sectors.
Due to the pandemic, people started securing their health by taking good health insurance plans, which has seen sudden increase in the number of insurance policyholders in India. An individual can claim up to Rs. 1 Lakh on the health insurance premium under Income Tax Section 80D which is not adequate for an individual with dependents Hence to encourage more people to own term insurance, increase in deductions for term insurance premiums is important. NBFCs faced liquidity crisis but now accounting for a sizeable 20-25% credit exposure in the country making them systemically important in their role and function so reforms in policies are also essential in this sector.
Every cloud has a silver lining. 2020 has been a game-changing year for few sectors such as logistics, IT, Ecommerce, Pharma and healthcare sector. So to conclude we feel there is a need of radical transformation in various sectors which will encapsulate an increased use of digital technologies and automation. So in that regard dedicated measures from government are requires to boost digitalisation and transparency which will drive the economy.
Every cloud has a silver lining.2020 has been a game-changing year for few sectors such as logistics, IT, Ecommerce, Pharma and healthcare sector. So to conclude we feel there is a need of radical transformation in various sectors which will encapsulate an increased use of digital technologies and automation. So in that regard dedicated measures from government are required to boost digitalisation and transparency that will drive the economy.
Prof. Dr. Smita Jape
Associate Professor,
DR V N BRIMS, Thane
Also read : SOME METHODS OF INCREASING THE INDIRECT TAX COLLECTIONS OF INDIA
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