By Harsh Roongta

At first glance, the budget appears to have done enough to enjoy the support of India’s burgeoning urban middle class. The long awaited change in the income tax slab, with the kind of boldness last displayed in 1997, needs to be commended.

This will clearly lead to substantial tax relief for an income tax payer. Also, the decrease in the General Cenvat (excise) rate should lead to some price stabalisation across the board.

Another good thing is the clarifying amendment of the Income Tax Act on the reverse mortgage scheme to enable very beneficial schemes for senior citizens to finally take off.

Having said that, the other side kicks in. The big Rs 60,000 crore giveaway (supposedly to benefit poor farmers) is the clear preparation for the 2009 elections. Whether it helps the ruling alliance to gain some votes remains to be seen, though the impact on the lending system will clearly be bad.

This is clearly an invitation to default on loans knowing that, come an election year, the government will bail them out. This is a huge dampener for honest borrowers who repay their loans in time.

It is also an invitation to borrowers to take a fairly adventurous position on the agricultural projects with a clear knowledge that if he succeeds, the gains will be his. But, if the project fails, the government is clearly there to bail them out.

When, it is the taxpayers money that is used to give away, we surely deserve a voice in this decision.

The author is CEO of apnaloan.com, an online guide for retail loan seekers.