You have aptly highlighted in your front-page report that fuel price increases could be round the corner (“Big taxes hikes done, fuel next,” March 17). Five features of Budget 2012-13 merit focus. First, it will lead to severe inflation that will hit the common man. The price of diesel is expected to increase in the next few months and that will raise the prices of basics and food items. Moreover, the aam aadmi will be burdened with additional taxes of Rs 45,940 crore.
Second, growth has slowed from nine per cent to six per cent. Rampant graft, declining investments, high inflation and uninspiring leaders have impacted the economy adversely. But the Budget does nothing to revive the economy or the morale of investors. Instead, it proposes legislation to overturn a Supreme Court ruling in favour of Vodafone — a move that will dissuade foreign investors.
Third, the minister promises more investments in infrastructure, roads, schools, meals and so on without explaining the sources of funding. This is sheer economic kite-flying. Fourth, high deficit financing (six per cent of GDP) will continue to be a bane. Fifth, the Budget underscores the weak political position of the government. It is becoming dysfunctional, unable to push through any reform.
It is time to consider waiving all income taxes in India, as in Singapore and the UAE. The government should generate revenues through indirect taxes like the value-added tax. Direct taxes like income taxes have led to the creation of a massive collection machinery. This machine operates in a dilatory manner and is frequently corrupt.
Rajendra K Aneja, Dubai
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