Monday 17 February 2014

Election oriented Budget

As elections are around the corner, and budget has been fashioned to please the voters. The economy is in a very bad condition and we are concentrating on getting election results. Tax cuts on auto mobiles(8% from 12%) capital goods and consumer durables(ACs, food processors, cameras, washing machines) are going to cut down revenue. So next government will have much less to spend on. This is bad news. No change in tax rules. So no increase in income for the government.; and it may seem ok now but this will hurt by us later on. Another give away is 'one pension' for all retired pensioners of armed forces. This was held back for all these years, but those states where every family has a a retired ex-serviceman(like Himachal Pradesh) votes will come pouring in. But the intelligent people will see though this cunning plan to rake in votes by bringing this policy exactly at election time.There will be 10% increase in defence expenditure. Subsidy(agri) will be 250,000 crores and agri credit will be 7 lakh crore($45 billion). This is bill which the government will have to foot. The finance minister makes improbable statements like 'we will reduce price rise'. But how will this be done? Current account deficit will be high. Why do we import coal when it is available in abundance in India? We need it desperately for we make electricity from coal. So electricity will be costly. Finance minister says that there will be opportunities for the educated young but where. Food security Act will be 150,000 crores. Cost of 12 subsidized LPG gas for every household will be high. And 1000 crores for Nirbhaya scheme.It all sounds good but it will make the treasury weak. Best part is that many schemes are given for the individual state government to implement, central government will give only the money. May be states will spend effectively and make the lives of citizens better.

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