India Budget 2021-22

 

India Budget 2021-22 is 'unprecedented'! Every budget has its own share of surprises and tough situations that they have all tried to stall.

On a birds eye view of the budget, this has some new things that we could be happy about. On one side, this is more an income expense statement for the upcoming year, which is what budgets are supposed to be. For the last few decades, budgets have become policy announcing platforms. Budgets are supposed to be a plan for income and expense. I think, with this budget the FM is reclaiming that position for budgets. But for the two non-finance approvals that also went through with the finance bill, there is nothing to complain about.

Having said that, budgets should mostly talk of allocation of funds for different spheres of social life in this country. Defence, health care, education, etc., Of course, health care takes in a large increase in allocation thanks to Covid situation and its immunisation scheme. But what happens with education and defence is certainly not as expected.

While the health care budget increased to 74,000 crores, it still stood at or around 1.8% of GDP. Compare this with the US spending of a whooping 17.7% of the GDP or the South Asian Average of 5.3% and that of Lower Middle Income countries (LMIC) at 5.4% of GDP!

Check out the education front. On education, we have actually decreased the allocation in 2021 budget by over 9,000 crores from the 2020 allocation! 3 to 3.5% of the GDP is spent by all of us on education together. Government spends about 1%. While it should increase to reach 6% of GDP, we have reduced it by about 6% of the earlier allocation.

The other important sector is Defence. The budget has increased the capital outlay for the defence by about 18.75% over the previous year. In 2020, defence spending as at about 2.1% of the GDP of the country. While in this year, it has grown to 4.5% of GDP, highest ever allocation for defence! Extraordinary and shows that the government banks more on military prowess than on diplomatic strategy. But, hey, let us welcome the defence spending!

As a tax payer, we need to also know which is the biggest expense to the government. Of course, it is the interest.

On the other side, revenue increase comes from multiple sources. Major increases are expected in GST collection. Primarily because part of electricity is now being taxed. That is electricity which is bought at less than Rs.3/- is sold at about Rs.8/-. The difference is looked at as a service and the government wants its share of the flesh. However many of these would vanish under the shroud of electricity which is not under GST. But then, at least 50% of these charges could be called as service and we need to end up paying this GST to the government. Well, all this was done prior to budget. Therefore, you will see that the GST collections have been hitting the roof all over the country because of the new inclusions in GST.

All said and done, it is the consumer who ends up paying more money whenever there is a new peak reached in tax collections.

The additional cess on petrol and diesel sails through these days with no one interested in discussing the impact of fuel price increase on overall working of the country.

I could see the thought process of the FM. Just leave the people to their wits. They will grow the country! And this budget is doing just that. Not much of increase, nothing to decrease. Just leave the people alone they will grow the country!