Big ticket reforms a challenge for Pranab

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posted on 12 years ago — updated on 1 second ago

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This is the last chance for a reformist Budget as the next one will be looking ahead to the 2014 elections.

New Delhi: With two years to go for the 2014 Lok Sabha elections, it should have been easy for Finance Minister Pranab Mukherjee to go in for a tough Budget and push through reforms like Goods and Service Tax (GST) and FDI in retail.

But the Budget, to be presented on February 16, comes just days after a poor electoral performance by the Congress, making it difficult for Mukherjee to push through with policies, which are being opposed by opposition states and allies like Mamata Banerjee.

The first indication that the Government may be forced to go soft came with Parliamentary Standing Committee on Direct Tax Code (DTC) making some people friendly recommendations.

The recommendations include slab for Income Tax exemption to be raised to Rs 3 lakh, special rebates for senior citizens and women, and deductions for individual tax payers to be focussed on long-term needs like social security.

Sources said that the Government is likely to incorporate these recommendations in the Budget.

But there are some policies, which the Government is keen to adopt. For example, a common GST, which does not require prior sanction of the states and its adoption is left to their discretion. While most BJP-ruled states have opposed it, the Government's argument is that GST would fill the Centre's coffers without infringing the states' finances. The GST is on hold for now.

Similarly, FDI in retail is the other big ticket reform the Government is angling for. Again this Cabinet-approved decision doesn't have to be implemented by states if they choose not to. The Government's argument is that it would stop wastage and also bring in foreign investment, but led by Mamata Bannerjee, the Opposition to FDI has increased, and it's too on hold.

But Congress spokesperson Manish Tewari said, "We are keen to walk the extra mile for our allies".

It would be a missed opportunity in case Pranab Mukherjee is unable to do some tough talk in his budget. This is the last chance for a reformist Budget as the next one will be looking ahead to the 2014 elections.