UNION BUDGET 2018 (O1ST FEB 2018) - OUR GREATEST NATIONAL GOALS - WHAT CAN BE DONE EASILY BEYOND BUDGET

UNION BUDGET 2018 

(O1ST FEB 2018)

 OUR NATIONAL GOALS 

WHAT CAN BE DONE EASILY

WITHIN & BEYOND BUDGET
TO ACHIEVE THEM

The Last FULL BUDGET of NDA Government was presented on First of February 2018 by Shri Arun Jaitley, the Finance Minister. 

The Budget was reasonably GOOD. Of course, it had nothing much to spur the STOCK MARKET specifically.

The Long Term Capital Gains Tax was in the air even before the Budget. It could and should have been postponed. But, Jaitleyji chose to introduce it in this Budget. Personally, I feel, that LONG TERM CAPITAL GAINS on EQUITIES must not be taxed. It could have been defined as 2 years holding instead of 1 year. But, the exemption should have been kept in tact.

Suppose, I hold some shares for 6 years and then sell at a profit of say 60%. I have contributed a lot to the stability of the company's net worth in many ways for 6 years. I have weathered the inflation. I have weathered the possibility of the company going into liquidation.

I have participated in the well being of the company in many ways. I attended the AGMs or wrote to them and voted on the resolutions. I discussed the future of the company in various forums and web sites. Somebody like me should feel like the owner and be responsible for the Growth of the company. It is so for the company and it is so for the nation.

For example, why do we need a PM like Narendra Modi? Modi feels, he is responsible for the Nation. So, he wakes up for the Nation all the time. Somebody like that only must be the Prime Minister. Not somebody, who doesn’t feel this much for the nation and doesn’t talk about the nation’s needs.

Company is not equivalent to its Buildings and the Machinery. It is equivalent primarily - to the LONG TERM EQUITY OWNERS  of the company, who participate in running the company. They are any way getting taxed as OWNERS, on the overall profits of the company, which is supposed to be their Income. They are once again taxed on the distributed profits or Dividends which come from the same, overall profits of the company. So, that double taxation should have been more than enough. Now, taxing it a third time, when he sell his shares, after a number of years is meaningless.

This concept of LONG TERM CAPITAL GAINS TAX IS ITSELF OBNOXIOUS. Government is taking no responsibility for any fall in the values of the company’s assets. It is not taking into account the results of Inflation on the values of these assets. If company incurs loss on sale of assets, Government remains far away without an iota of sympathy for the company. If the company goes into liquidation,  the equity owners do not get a paisa on the sale proceeds all of which go to the debtors and not to the owners. Unless Government is willing to compensate for loss in values of company’s assets, Government should not come for taxing the rise in values of assets.

The very idea of company is fraught with huge risk. Depreciation depletes all its assets (except land) 100% within a short time. The burden of replenishing the assets is borne by the equity owners only. There are many such aspects of risk taking borne by Equity owners of the company, which must be understood and appreciated.

Long Term Equity owner is not like a speculator or a Portfolio Manager.  There is a definite need to encourage him to keep his equity for longer term and not behave like short term owner of the equity or worse, like a speculator on equity prices on day to day basis, with no regard what so ever for the health of the company.

Even now, my humble suggestion to the Government is - retain respect for the long term owner of the Equity. Do not Tax him at all for the third time. If need be, define long term as 2 years.

This apart, in General, the Union Budget is very good. As expected, there were many provisions for farmers, farm incomes, MSMEs, universal citizen health and so on.

Budgets can't provide for All aspirations of all people. Budget has to balance Estimated incomes with the proposed expenditures. So, some grandiose schemes do get left out always. We will never have SURPLUS BUDGETS. If we contain the Budget deficit within 3.5 to 4%, it is considered a GOOD BUDGET.

That said, what else could have been done in the Budget without pinching on the Budget deficit? The ideas below are always there but for some reason, they never get implemented, even though, they do not impinge on either the revenues or the expenditures of the Budget.

1. All NEW INDUSTRIES to be established from now on could be exempted from various taxes for next 6 years.

2. All NEW JOB CREATIONS from now on could be exempted from various taxes for next 6 years.

3. All donations for EDUCATION OF the poorest children /orphan children can be made totally exempt from income tax. 

4.All donations and Expenditures for construction of HOSPITALS  or for purchase of critical equipment specifically intended for treatment of the poor and the Middle class can be exempted from ALL TAXES for next 6 years.

5. All expenditures on construction of New Toilets in rural areas/slums etc by private Individuals/firms/trusts/companies can be totally exempted from Tax.

In short, what Government intends to do through its Budgetary allocations, if a private individual or organization does, allow it TOTALLY for deduction from Income tax and other taxes. 

Spur all private expenditure on Government Budgetary schemes so that people participate in Nation Building in a Big way and there is no time lag in provision of essential amenities like toilets, hospitals, doctors, education, roads etc for the masses. Let there be Private participation in Nation Building  in a massive way. Of course, Government can take all precautions to prevent misuse. But, not utilizing willing private participation and not encouraging it is a Huge mistake always.

Unfortunately, Governments till today are hesitant and afraid of using private initiative in Nation Building except in a very limited way. Today, we are effectively preventing from the proper, voluntary, effective Use of private funds for nation building. In using this, Government’s existing tax revenues are not affected in any way. But, its expenditure commitments are met more effectively and faster and the targets can be easily surpassed every year. Nation  as a whole participates in nation building. Corruption will be much less. Audit can be limited to ensuring the actual targets.

FEEDING THE POOR is a Great and essential activity in a country like India and is sanctioned and approved by all religions. ALLOW expenditure on it fully for INCOME TAX PURPOSES - at all PRE-approved places like schools, temples, colleges, specified ANNADANAM PLACES and so on. Let there be no Hunger and no starvation related deaths in India. We can always take adequate pre-cautions to prevent misuse of individual’s funds - by insisting on date, number and proof. In these days of Technology, it is quite easy to obtain valid proof.

What is needed is abolition of Hunger and hunger related deaths - and participation of ALL PEOPLE  in this National Goal. Hesitancy and suspicion should not be excuses for preventing such private initiative in achieving National Goals.

Will the NDA Government listen to these ideas? Will it want to ensure that starvation becomes a thing of the past in India - before it demits office next year?

Is Shri Arun Jaitley listening? Is Shri Narendra Modi listening? If you don’t do it, Nobody else will do it. After another 10 years also, we will be speaking of starvation deaths. So do we want that or do we want to close the chapter of starvation related deaths IMMEDIATELY and permanently? Whoever reads this, please try to ensure that it gets implemented, that Modi and Jaitley examine this and implement this.

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