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India needs a simple budget

Dr P Pullarao

Every Finance Minister in India,who is not an economist wants to show off to the country and to the business sector that he has mastered economics and understands the technicalities of budget making. Such a Finance Minister wants to make all kinds of changes or introduces all kinds of taxes and complicates the economy. In India, after Manmohan Singh and even before him, we have not had many Finance  Ministers who were professional economists.. Nearly all were politicians .Of course, there was Dr.C.D.Deshmukh and a couple of others. Non-economists,particularly lawyers, cannot resist the temptation to try to be more erudite than professional economists. Arun  Jaitley has also not been able to resist this lure in the last 2 budgets.
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There are much expectations that Finance Mister Arun Jaitley will present a better budget than  he did on the last two occasions.No other Finance minister in Indian history has had it so good as Arun Jaitley. He is the first Finance Minister, who is under no stress at all as oil prices have declined for the last two years and Govt. of India has been spared nearly Rs. 3 lakh crores of annual subsidy.
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Indian agriculture is also fast becoming a Monsoon- free agriculture. The great swings of the economy which depended on the monsoon are not there.Better transport connectivity has led to easier movement of food and other products to combat scarcities anywhere and bring down prices.
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Simple Budget needed:
The best thing that can happen to India is to get a simple budget.Arun Jaitley will be tempted to make it a very complicated and seemingly  thought out budget, But that would be a mistake. if Arun Jaitley can present a simple budget ,then he will succeed. But  Arun Jaitley will be under great temptation to show himself  as a master economist and a great fiscal technician who has mastered the world of Finance. That would be a  big mistake.
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Arun Jaitley has raised great expectations himself that he will present a very complicated budget.He should have not allowed  such expectations to come about. Jaitley should have simply  said that it will be a simple budget and he will focus on reducing taxes on ordinary people. Instead for the last  6 months ,Jaitley has ben focusing on PanCard  issue and tightening up tax collection on ordinary people. Just like his predecessor Chidamabaram did.
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The Finance Ministry has been talking only about revenue collections. The best thing for Jaitley to do is to reduce indirect taxes and give a boost to the Indian economy. The Finance  Minister should be mindful of the deadly headwinds buffeting the world and the threat of an economic slowdown.To counter such threats of economic slowdown, Jaitley should reduce Service tax immediately .If Jaitley reduces taxes, then the budget will be a success. Otherwise, his stint as Finance Minister   will become very controversial. Extreme simplicity is said to be elegance. Jaitley might just follow his predecessors and appear erudite. But he will be sacrificing elegance for confusion.
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Arun Jaitley should read up on the great Finance Ministers of UK,USA and Europe. Or better still, Jaitley should read how Latin American Finance Ministers weathered enduring long economic storms their countries faced.All financial crisises were faced by simple solutions.
Leave taxes alone. Reduce Service Tax.Reduce tax bureaucracy.Save people from income tax authorities. Try not to introduce complicated budgetary tools.Do not take the route of simply increasing the  Income Tax exemption .Give real relief by reducing indirect taxes.If Jaitley does not do these things, he will harm Modi’s government severely.
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Finance ministers determine whether their governments  are successful or failures. February 29 , 2016 will in a large way show the probable destination of  the Modi Government .
Dr P Pulla Rao is a Socio-political and Economic analyst

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