Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: cpt :: form 3cd :: VAT RATES :: articles on VAT and GST in India :: TDS :: VAT Audit :: empanelment
 
 
Budget Extravaganza »
 How presenting the Budget early seems to be paying off already
 Budget advancement helps Centre, states start spending early
 Five things that you can expect from the Mumbai civic budget today
 GST all set for July 1 rollout but casts shadow on state budgets
 Income-Tax collection revised in Rajasthan budget
 No new taxes likely in Maharashtra Budget
 H.P. budget devoid of any financial prudence
 GST, demonetisation todecide budget priorities
 Railways to come up with mini-budget tomorrow
 Budget today, but GST kills the tax suspense
 Budget 2017 does little to expand taxpayer base, salaried still bear brunt of taxes

Budget 2012: UPA defines a new trade-off between growth and equity
March, 15th 2012

Tomorrow's Budget, more than most Budgets in the past, will be judged by FM's efforts at reversing the deterioration in the government's finances. Many analysts view the coming Budget as a make-or-break one: either the government effects a drastic correction or we are condemned to low growth and high inflation in the near future.

It would be unwise to take such an absolutist position. It is best to recognise that, given the government's orientation towards social spending, correction can happen only over an extended period. The broad direction rather than the magnitude of correction should be the yardstick for judging the Budget.

The fiscal position is challenging but it is useful to note a couple of positives in the situation. One is that sustainability of debt is not the issue. The 13th Finance Commission (TFC) had set a target for total debt-to-GDP ratio (of the Centre and the states) of 68% by 2014-15, with the Centre's share coming down to 44.8%. The Budget for 2011-12 had forecast a ratio of 44.2% for the Centre. This will not happen because borrowings will exceed the Budget forecast but the ratio will still be within 45-46%.

Some commentators say the Centre's fiscal deficit this year is almost the same as it was at the start of reforms. True, but the Centre's debt-to-GDP ratio at the time was 56%. India's debt position looks far more sustainable today. It also looks a lot better than that of many advanced economies where the ratio has crossed 100% of GDP.

Secondly, state finances are in better shape. As the finance ministry's Mid-Year Review notes, prior to the global crisis in 2007-08, the states' fiscal deficit was just 1.5% of GDP and they had a revenue surplus of 0.9% of GDP. According to the latest review of the PM's Economic Advisory Council, the fiscal deficit of states today adds up to 2.1% of GDP - well within the limit of 3% set by the TFC.

The Mid-Year Review notes that the combined fiscal deficit of the Centre and the states, which ballooned to 9.3% in 2009-10, declined to 7.7% in 2010-11. It should end up at around 7.5% for 2011-12. Thus, fiscal consolidation for the economy on the whole remains on track even though it will not be true for the Centre's finances in 2011-12.

How do we carry forward the process of consolidation? Thus far, growth and tax reform rather than expenditure cuts have been responsible for fiscal correction. In this respect, India's experience has differed from that of other countries where fiscal correction has taken place primarily through expenditure correction.

In respect of tax reform, two important proposals are on the table: the Direct Tax Code and the goods and services tax. The latter will involve more discussions between the Centre and the states but the first should go through soon. In addition, there is scope for extending the service tax to all services except for a small negative list.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
System Testing Solution Manual Software Testing Solutions Automation Software Testing Solutions System Workflow Testing System Manual Testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions