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Mar 02, 2012, 03.24 PM IST | Source: Moneycontrol.com

Pranab Mukherjee: Pro poor or anti poor Budget?

With the Budget, being the most important financial event of the country, it is natural that common people have huge expectations from it.

Rajiv Agrawal, MD, Wellindia Group
By Rajiv Agrawal, MD, Wellindia Group

Every February brings an excitement for the entire country when the public starts speculating and assuming the forthcoming Budget. There goes lots of discussion and anticipation of what the Budget will store for each and every one of us. How the Budget is going to affect our lives, our dreams, our goals. Will this Budget bring in enough prospects for us or is it going to be anti public? Is it going to increase the taxes or is it going to be a boon for the stock market? These are the questions which strikes every individual these days. Everybody is looking forward to the expertise of our Finance Minister, how intelligently he manages the Budget keeping in mind all the sectors of the economy and keeping in mind the lives of the general public.

With the Budget, being the most important financial event of the country, it is natural that common people have huge expectations from it.

The following are the pre assumed impact of the upcoming Budget on the public:

Students: The seeds of development lie in education. Today’s children are the future of tomorrow. Education to a large extent shapes the overall life and personality of every child. This becomes necessary that every child in India gets the benefits of education. If we talk about the last budget, it came with big boost, when Pranab Mukherjee announced a substantial increase in budget of 24% in the education sector. We had seen the objectives of Right to Education, which was aligned to ‘Sarva Sikhsha Abhiyan’ which was hiked from Rs 15,000 Cr to  21, 000 Cr. Although we had seen such developments yet we can’t deny the increase in school fees and tuition fees. Therefore, if we see an increase in service tax (expected increase 1% to 2%) in budget 2012, then no doubt it will further increase the educational costs in the country, which will definitely have a negative impact in the lives & careers of the students. 

Businessmen: Businessman generally expects the budget to create a positive environment in the marketplace for him to do business. Will our Finance Minister boost the sentiments and business confidence by announcing consumption oriented budget? Last year’s budget had brought some relief to the common man. The expansion of tax slabs not only provided considerable relief to tax payers but had also triggered savings and their consumptions for infrastructure development. Pranab Mukherjee had declared a tax exemption on   20,000 for investing in tax saving infrastructure bonds.

Yet a number of earning individuals were hoping for a comeback of Standard Deduction, but were left unpleased after the announcement. Under the new tax slabs, base slab for tax payers has been increased to Rs. 1.8 lacs from   1.6 lacs. Also the second slab with 10 % income tax bracket on taxable income up to Rs 3 lacs has been increased to Rs 5 lacs. Therefore this budget should ease the direct taxation slabs which will prove beneficial for the professionals and businessmen & will help them expand their business. But to what extent, that remains a question in everyone’s mind. On the other hand if the taxes are increased it will end up in a negative scenario. There can be additional surcharge to compensate the fiscal deficit.

Salaried class: As per last year’s budget plans, Salary earners having an income of less than Rs 5 lakhs will not have to file tax returns. Indian Government has been trying to simplify Indian Taxation Processes for past couple of years now, and this announcement is a big step towards that. Last year, during the budget announcement, Direct Tax Code Bill was introduced which promised to make life simple for consumers as well as Businesses for filing tax returns. This year we expect the direct tax code to come into effect. There are various proposals in this aspect which could have a direct impact on the salaried individual. If this would happen, there will be a great relief for the tax payers.

There can be addition to the limit under section 80C, this can be increased to Rs 1, 50,000 from existing Rs 1, 00,000. Investment in infrastructure bonds may continue enjoying additional  20,000 deductions from the taxable salary. There can be minor change in the base slab for different class of individuals.

Housewives: The housewives are burdened with the management of the entire house expenses. As a house wife she manages her monthly budget spending on food, buying other necessary items for the house & for her family. If we talk about last year, all the housewives had a hard time dealing with the price hikes of the vegetables and grocery items. The price hikes in LPG gas have been worrying her and making it difficult to run her household properly. If there will be a fall in the subsidies on cooking gas & diesel it would lead to increased cost of food consumption. This will straight away decrease the disposable income and might have an effect of life style of the middle income group families. Additional service tax will also increase the tension of the housewives. 

Retired Personnel: 2011 brought a great relief for many when the government announced that the retirement age of the Central government employees to 60 years of age. The senior citizens are currently availing the benefit of having tax exemption up to 2,50, 000/- In Budget 2012 also many retired individuals are expecting certain benefits to ease their lives. Last year senior citizens were divided into two categories for the purpose of taxation. We look forward that the annuity part of the pension to immune the tax, which is been proposed in the Direct Tax Code. It will benefit the individuals to invest their money in pension plans. This budget we would expect the tax exemption to go up to   4,00,000/- -  5,00,000/- which will further help them live a better life.

The Budget 2012 is going to affect us in every way. Our country receives money through taxation and has a list of expenditures to be met. We hope that our Finance Minister balances the budget in such a way that it meets and fulfills every aspect of the people’s need & country’s development. Although it is not in our hands yet we are looking forward to a pro poor and a conducive budget this time. 

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