Charlie Munger has said that "The key to happiness is to lower your expectations." The present government of Mr. Narendra Modi does not have that luxury. The government has been voted to power under the burden of high expectations.
If I had to characterise the budget presented by Mr. Arun Jaitley in one sentence, I would call it "An attention to detail budget." Various individual sectors, states, regions have been called out by name and the measures to address the problems pertaining to those areas have been sought to be addressed.
Opening up of FDI, Clarity on tax matters by way of advance rulings, transfer pricing mechanisms, tax clarity for Foreign Portfolio Investors, regular interaction with Trade and Industry for clarity in tax laws, tax friendly REITs and Infrastructure Investment Trusts are good measures.
The flip side to attention to detail has been the lack of broad vision and big bang bold measures.
Instead of a clear roadmap toward elimination or reduction of petroleum and fertiliser subsidies we have an brand new "Expenditure Management Commission" What happened to the reports of all the earlier commissions that were set up? If nothing else the expenditure on one more commission could have been saved.
GST and DTC have been given the usual lip service but we are not sure as to when the implementation will finally happen. Even on the matter of retrospective taxation, all we have got is a promise that the government and tax authorities will behave themselves in the future.
Tokenism in the form of small allocations and naming of schemes after dear departed leaders continues under the new government as well.
While NDA 1 was well known for its privatisation and dis-investment of PSUs, we have heard nothing on that front in the budget. What happens to sores like Air India, MTNL etc.?
An intriguing aspect of the budget was the announcement of Rs. 10,000 crores start up fund. There are many question here like "Who will put in the funds?" "What will be the criteria for investments?" and so on. I hope we will not have bureaucrats functioning as Angel and Venture Capital investors.
The measures on taxation of debt mutual funds will effectively kill the segment and I see a lot of funds moving away from this space. The unfortunate part is that even past investments made on the basis of the then tax laws will be hit by higher taxes.
There has been a backdoor increase in dividend distribution tax based on the method by which it is calculated. It has gone up from 15 per cent to 17.65 per cent.
To be fair, the current government has not had much time since being sworn in to prepare the budget. I hope that the next budget is far more ground breaking than the current effort.
