Well, the Aam Aadmi lives on hope. While we have our wish lists ready, it's only on February 28 that the verdict will be out. We do hope the FM plays Santa and brings some good cheer in this financial year. Meanwhile let's take a moment and list our expectations.
As the Finance Minister reads out from a bunch of papers on the Budget Day, everybody listens holding their breath. The FM's voice is the only hope we have to get some relief from the financial stretch which persists until the next budget. The only question on everybody's mind is: What's in it for me?
#1. More money in my savings account
The country's savings rate was the highest in FY08. As economic conditions worsened, we have never been able to touch the highest saving rate of 36.9 per cent. To boost GDP growth to 7-8 per cent, the country's saving rate definitely needs to go up. The budget needs to encourage financial savings through tax incentives. This will be especially effective if tax incentives on small savings scheme are announced.
#2. Study further without going broke
Majority of our population is young. And that's a blessing for the second most populated country in the world, only if we count it as one. This vast majority needs education as a base on which we shall be building a strong nation. The government has been focusing on primary education and basic schooling requirements in the past. But it is equally important to encourage higher education. Education is an expensive affair and the government must take steps to lower education loan rates to make it affordable.
#3. Dream to reality: Apna Ghar
Property prices have shot up and owning a house is on the wish list of many. Affordable housing needs to be incentivised. The current limit is Rs 200,000 for deduction for interest on housing loans. This limit needs to be increased to provide some tax relief and boost housing sales. Also, it will help if a separate provision is provided for the principal loan amount, which is currently included under Section 80 C.
#4. Medical expenses must provide more relief
A general visit to the doctor for flu costs no less than a thousand rupees. Let alone complex medical conditions which need to be treated and the heavy bills generated by a string of tests and a tray full of medicines. Having said that, currently the income tax on medical reimbursement is exempted up to Rs 15,000. This needs to be revised upward to provide the much required additional tax relief to those who are already paying for expensive medical treatments.
#5. Encourage insuring the future
Premium paid under life insurance policies is currently under the umbrella of section 80C for deductions. Section 80C allows deductions up to Rs 150,000 and it includes other payments as well. Life insurance cover is important and everybody must be encouraged to go in for it. A separate tax provision must be provided for the premium paid.
#6. Time to end the debate on allowing FDI in retail
This topic has been in discussion since a long time. Contrary to the point raised that this will not work well for the small vendors, this move can actually boost their business. International funding, experience and logistical expertise is what will flow in and help our market. E-commerce will receive a boost as well. In the long run, consumption will be boosted along with providing other benefits like employment opportunities and business opportunities for small vendors.
#7. Encourage retail investors to invest in equity
Currently tax benefits are granted to retail investors for investing in equity markets under Section 80CCG. However, the government must encourage more investors to put in their savings money in the equity market by incentivising this move. At present the income ceiling is Rs 12,00,000 and this can be increased to boost investment in equity.
#8. A workable blueprint
All said and done, all the plans have to actually work and show the results. Taking a clue from history, and speaking on behalf of every Indian, all we are asking for is a workable plan. The budget may sound good but will fall flat if it does not work as per the plan. Let's hope the FM has a practical and workable blueprint.
It's time we experience 'the acche din'. Here's hoping the FM brings good news for everybody on the February 28 this year. We are all ears Santa Jaitley, let the reading begin.
Photograph: John Niedermeyer/Creative Commons
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.