Dr. Vijay Pithadia
Why does slight tax structure cost of two hundred dollars arid a substantial tax cut save you thirty cents? Said by Mr. Peg Bracken, but Union Budget 1997-98 of India presents the bold performance and global vision by Finance Minister P. Chidambaram on Friday 28th February 1997 at the Loksabha. He has slashed income tax, corporate tax customs duties and yet the fiscal deficit to 4.5 % of GDP with adding FEMA [Foreign Exchange Management Act] replace to FERA [Foreign Exchange Regulation Act], MAT [Minimum Alternative Tax] eased VDS [Voluntary Disclosure Scheme] and Insurance sector partially opened up.
Impact on Laymen Level:
The Union budget for 1997-98 has set aside a whopping Rs. 16,690 crore for food grains and fertilizer. Subsidies of Rs. 7,500 crore will be for food grains including sugar and Rs. 9,190 crore have been remarked for fertilizer. The budget estimate of food subsidy for 1997-98 is higher than the revised estimate of 1996-97 by Rs. 1,434 crore. The BE [Budget Estimate] for fertilizer subsidy is exceed than the RE [Revised Estimate] by Rs. 1,423 crore. It would be lead towers better life condition prospects for the laymen and farmers also.
As according to Professor Abraham Maslow’s model Physical needs of laymen i.e. cosmetics and toiletry goods excise duty decrease from 40 % to 30 %, detergents from 25 % to 18 %, biscuits and confectionary items from 10 % to 8 %, in the transportation category tax on Taxies from 30 % to 25 %. Such items i.e. cigarettes, beedies excise duties is hike.
Impact on Middle level:
In the budget personal income tax has been slashed from 15 %, 30 %, & 40 % to 10 %, 20 % and 30 % for attracting the peak rate. The starting point is now Rs. 1.5 lacks instead of Rs. 1.2 lacks & the standard deduction limit has been raised from Rs. 15,000 to Rs. 20,000 up to total income of Rs. 1,20,000 there are 33.33% proposed relief for middle class. Existing tax liabilities on above income are Rs. 21,000. It will become decreasing up to Rs. 14,000.
But the post card, Inland letter & Envelopes to cost more and it shall not a good approach among communicator. Its laid to good impact on savings of middleclass and increased purchasing power leads towards flow of money in the market and it should vigilance each and every stage of the related administration so that such types of practices reduces and benefits to middle level as well as government too.
Impact on Corporate level:
Corporate tax cut to 35% for Indian Companies and 48% for foreign companies boosting corporate bottom lines. In the 1993-94 the rate of corporate tax was remarked at 51.75%, during 1994-95 it was 43% and 1995-96 it was same but in current year 1997-98 the corporate tax decrease by more than 15% compare with 1993-94.
The new scheme for reducing the black money run in the market by VDS [Voluntary Disclosure Scheme] leads when the administrative and public participation were there Fiscal Deficit cut by 4.5% showed the temperament of the budgetary magician P. Chidambaram.
Overview of corporate level we can say that the impact on import-export ratio would be favorable to India and foreign relations. FEMA is another effective step but another laws i.e. MRTP Act, Company Act, Insurance were out of date and sustain for sack of unusual purpose. After acceptance and implementation of good thing is necessary.
Objectives of Union budget 1997-98 were geared towards higher growth of Indian economy. Despite pressure from some of the 13 parties Finance Minister P. Chidambaram has attempted to balance the needs of the many sections of Indian economy. As a laymen point of view budget should be better i.e. subsidies in food grains, fertilizer, decrease taxes in cosmetics, toiletry goods, confectionary etc As a middle level there are few remarkable points i.e. decrease in Income Tax rate and standard deduction limit raised. Consumer goods price decrease but postcards, envelopes & Inlandletter prices increasing As a corporate level the impact of decreasing corporate tax rate, new provision of FEMA, MAT leads to the economic revolution. If the system turn vigil on each and every aspect of implementation, otherwise it will remain as a UTOPIAN concept to the down trodden.