Union Budget 2022: Mental health finds rare mention in Budget; what does it mean and how will it help

As India enters its third year of battling against the COVID-19 pandemic, the importance of mental health is quickly being accentuated and spoken of.

And in a rare moment, the significance of mental health also found a mention in the Union Budget speech of Nirmala Sitharaman.

Speaking in Parliament, the finance minister said on Tuesday, “The pandemic has accentuated mental health problems in people of all ages. To improve the access to quality mental health counseling and care services, a National Tele Mental Health programme will be launched.”

Here’s a look at the situation of mental health in India and what Finance Minister Nirmala Sitharaman plans to do to improve it.

Mental health crisis in India

The COVID-19 pandemic has exacerbated mental health issues in the country.

The physical isolation to which the population has been subjected, added to the fear of the immediate effects of the virus on health, have been two of the main triggers. Besides, economic woes, misinformation and rumours (often distressing) about everything surrounding COVID-19 have also contributed to it.

In October 2021, a study in Lancet reported a 35 per cent increase in mental health problems in India.

In the same month, a UNICEF survey found that “around 14 per cent of 15 to 24-year-olds in India, or 1 in 7, reported often feeling depressed or having little interest in doing things”, exacerbated, among other things, by ongoing school and college closures.

In November 2021, the governments National Crime Record Bureau (NCRB) annual report showed suicides in India increased by an alarming 10 per cent in 2020 during the pandemic – nearly 400 Indians died by suicide each day in 2020.

Even prior to the pandemic, there was an acute shortage of mental health services in India. The National Mental Health Survey in 2016 reported that nearly 70-80 per cent of those with mental illness in India received no treatment.

Funding for mental health

Viewing these conditions, it seems that mental health in India is an often ignored aspect.

In fact, last year's Budget had proposed a corpus of Rs 71,269 crore for Ministry of Health and Family Welfare. This also included the budget for mental healthcare – a total of Rs 597 crore.

Of this, only seven per cent was allocated for the National Mental Health Programme; while a majority of it has been set aside for two institutions: Rs 500 crore for Bengaluru based National Institute of Mental Health and Sciences (NIMHANS) and Rs 57 crore for Lokpriya Gopinath Bordoloi Regional Institute of Mental Health in Tezpur.

However, the situation seems to have changed this year.

Budget brings a change

On Tuesday, Nirmala Sitharaman, while presenting the Budget, said in her speech that mental health problems plagued people of all ages and hence, announced a plan to set up a National Tele Mental Health programme in India.

The finance minister said 23 tele-mental health centers will be launched with the National Institute of Mental Health and Neuro Sciences (NIMHANS) as the nodal center.

The Indian Institute of Technology (IIT) Bangalore will provide tech support for the mental health programme, she added.

Interestingly, Nirmala Sitharaman began her speech by expressing "empathy for those who had to bear adverse health and economic effects of the pandemic."

The Union Budget 2022 document shows the Budget Estimate 2022-23 for the health sector stands at Rs 86,606 crore. This is an increase of 16 per cent from Rs 74,602 crore Budget Estimates in the financial year of 2021-222.

Health experts react

Mental health experts hailed Finance Minister Nirmala Sitharaman’s announcement, saying it was a move in the right direction.

Dr Girdhar Gyani, Director General, Association of Healthcare Providers (India), was quoted telling News18 that the government's intent of focusing on setting up 23 mental health centers will be beneficial in general and more specifically for long COVID patients.

Dr NK Pandey, Chairman and Managing Director, Asian Institute of Medical Sciences, also added, "It is encouraging to note the government's attention to addressing the challenge of rising mental health issues in India and proposed to launch a National Tele Mental Health Programme. The budget, inculcating the fact that focusing on mental and emotional wellness is the need of the hour, itself talks about how progressive we are becoming in our approach as a nation, Pandey said.

Kamna Chhibber, head, mental health department, Mental Health and Behavioral Sciences, Fortis Healthcare welcomed the “much-needed” move.

“This ensures that it helps the shift towards normalising conversations on mental health, encourages people to recognise mental health-related illnesses, seek treatment and also remove stigma in the long run. In a large country like ours, we have a significant paucity of experts and accessibility and affordability have continued to be an issue,” told indianexpress.com in a report.

With inputs from agencies

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Magha Gupt Navratri 2022: Find out date, puja vidhi, tithi and significance of the festival

Magha Navratri is an auspicious festival for the Hindus. It is a nine-day-long affair that is solely dedicated to the nine avatars of Mother Goddess. Also known as Gupta Navratri, it is celebrated four times a year.

Among the four celebrations, only two are famous and are identified as Chaitra Navratri and Sharadiya Navratri. The other two Navratris identified as Magh and Ashadha are less popular and are referred to as Gupt (secret) Navratri.

As per the Hindu calendar, this special festival falls in the month of Magh (January or February) and is also known as Gayatri 'Shishir Navratri'. Magha Navratri is celebrated and observed by people living in states including Himachal Pradesh, Uttar Pradesh, Punjab, Haryana and Uttarakhand.

When will Magha Gupt Navratri be celebrated this year?

As per the calendar, the festival will commence on 2 February and conclude on 10 February. Apart from devotees, the Magh Gupt Navratri is mainly practised by sadhus and tantriks. They observe this festival to please Goddess Durga and seek her blessings. Also, it is believed that to achieve one's goal one should observe this festival in secrecy, as per Hindu mythology.

Significance

Goddess Durga is Lord Shiva’s wife and she represents feminine force. Worshipping her nine forms during Gupt Navratri is believed to ward off evils and obstacles from life.

For the unitiated, Goddess Durga’s nine forms are Chandraghanta, Kushmanda, Skanda Mata, Katyayani, Kalaratri, Maha Gauri, Shailputri, Brahmacharini and Siddhidatri.

Puja Vidhi

Devotees who are planning to observe this festival should keep these few things in mind:

1. For nine days, those observing this festival should not shave or cut their hair
2. They should not fight with family or friends, else puja will not be fruitful
3. Respect women and their opinion in the family
4. During these days, sleep on the floor
5. No consumption of alcohol, or eating onion, garlic or any non-veg item
6. Also, do not wear black clothes, leather shoes or belts.

Check date and tithi:

2 February: Pratipada (Tithi), Shailputri and Brahmacharini (Navdurga form)

3 February: Tritiya (Tithi), Chandraghanta (Navdurga form)

4 February: Chaturthi (Tithi),  Kushmanda (Navdurga form)

5 February: Panchami (Tithi), Skandamata (Navdurga form)

6 February: Shashti (Tithi), Katyayani (Navdurga form)

7 February: Saptami (Tithi), Katyayani (Navdurga form)

8 February: Ashtami (Tithi), Maha Gauri (Navdurga form)

9 February: Ashtami (Tithi), Sandhi Puja (Navdurga form)

10 February: Navami (Tithi), Siddhidhatri (Navdurga form)

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Sonam Lochar 2022: All you need to know about the Tamang community's new year celebrations

Sonam Lochar is celebrated in Sikkim annually sometime during January-February. An important festival of the Tamang community, Sonam Lochar marks the beginning of their new year. This year, the festival starts from 2 February.

According to the official website of the Sikkim government, the festival will last from five to 15 days in various parts of the state. Sonam Lochar falls in the month of Magha Shukla Paksha during the spring season.

The festival is also marked in Bhutan, Tibet and Nepal as well. In India, 2 February will be a bank holiday in Gangtok on account of the festival. All public and private lenders will be closed on this day.

Celebrations

Sonam Lochar is marked by offering prayers at monasteries. People also visit their relatives to seek blessings from the elders of the family. People wear colourful traditional outfits to mark the importance of the day in their lives.

The festival also sees Tamangs display their cultural heritage by engaging in traditional music and dance performances. Tamang Selo, a special group dance of the community, is performed with great enthusiasm. Many of the dances are performed to the beat of the damphu, a traditional drum.

The songs sung on the occasion of Sonam Lochar highlight the vitality of the Tamang community. These songs are also called Hwai, according to the official website of the Sikkim government. Any celebration is considered incomplete without these songs.

People also clean and decorate their houses and prepare delectable feasts to mark the new year with great joy and celebration. Monasteries in Sikkim also mark the day with great pomp and vigour and organise several events such as dances and musical performances.

Significance

The Tamang community believes that Lord Buddha was born on the first day of the new moon, in the month of Magha. Therefore the first day of the festival is believed to be the most significant one. On this day, the main celebrations and dances take place.

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How Union Budget 2022 is as practical an exercise as it is visionary

Every time there is a Budget, questions are asked about what the Budget has for the common man, or common woman. Those who appear on TV channels are not the common person, by no stretch of the imagination. The only person who has ever defined the common person satisfactorily is RK Laxman. The expression “middle class” is equally vague and ambiguous.

Article 112 of the Constitution requires an annual financial statement to be laid before Parliament, an annual statement of Union government’s receipts and expenditure. Union Budget is just that and no more. Especially since 1991, Union Budgets have been, however, perceived to be more. They are statement of Union government’s intent, on policy changes and reforms. In passing, not enough attention is paid to state government budgets, where bulk of expenditure actually takes place. Also in passing, this Budget has enhanced assistance to states for capital investments. Post-1991, policies and Budgets have been about reforms, however that expression is defined. So far as Budgets are concerned, the word reform implies transparency and stability about taxes and expenditure.

Let’s take taxes. We might have complaints about multiplicity of rates under GST and the fact that not all products and services are part of GST. That said, these are GST Council issues and GST is work in progress. However, the Budget does have procedural improvements. To quote from the fiscal policy statement, “Government is working towards reform in GST administration through further simplifying GST filing and refund processes.”

Historically, our minds have been fixated on whether a particular Budget slashed excise.

As a mindset, that’s over and done with. Taxes are meant to be stable and certain, though as I said, GST is still work in progress and decisions will be taken by GST Council. This leaves direct taxes and again historically, we have looked at Budgets with the prism of whether tax rates have been reduced.

Let’s think of the following. First, we have an artificial distinction between personal income taxation and corporate taxation, with unincorporated enterprise paying personal income tax rates. Second, there are 59 million tax returns. Since direct taxes are superior, from a distributional angle, to indirect taxes, shouldn’t that figure be much more? This of course gets into the question of taxing farmer income, the domain of states. Third, of the 59 million tax returns, only 15 million actually pay taxes. This isn’t always evasion. It is more tax avoidance, availing of legitimate tax exemptions. Direct tax reform therefore involves the elimination of exemptions. An option had already been (both personal and corporate) of choosing the exemption-less route. There were few takers.

Fourth, this means the removal of exemptions will lead to an increase in effective tax rates for some segments. Given that economic recovery, documented both in Budget and Economic Survey, is not yet robust, it would probably have been premature to attempt removal right now. It’s still a terminal goal, but not this year.

Fifth, there are multiplier benefits from reducing taxes and multiplier benefits from increasing public expenditure by the same amount. Every economist knows, or should know, this. Hence, in the midst of an uncertain recovery, if I am going to fiscally stimulate an economy, it’s better to do that through public expenditure, not tax reductions. Sixth, every concession granted to a certain segment causes distortions. Seventh, anything given away in the form of a direct tax concession (to the so-called middle class that pays income taxes), means resources that cannot be spent of improving the enabling environment for the relatively poor.

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It Takes Every Village: Budget 2022 pushes for rural self-reliance and strength

Budget 2022: Nirmala Sitharaman offers weak consolation prize for honest taxpayers

Union Budget 2022: Disappointing for middle class, but good for economy

***

The point of this harangue is that we shouldn’t have unrealistic expectations about this Budget, or any Budget. “There is nothing as certain as death and taxes.” This is often attributed to Benjamin Franklin or Mark Twain, though the expression was used before them. Tax rates are on their way towards becoming certain and fixed.  Whatever be the expectation of a few, we should applaud the fact that the Budget didn’t touch direct taxation.

What of expenditure? The finance minister said, and everyone agrees, until investments, consumption and exports recover, it is premature to curtain public expenditure and attempt aggressive fiscal consolidation. A 6.4 percent fiscal deficit/GDP ratio, with a 0.5 percent reduction from the revised estimates for 2021-22, is just about right, with the terminal goal of 4.5 percent in 2025-26 not given up.

I should add that a couple of year ago, Nirmala Sitharaman brought greater transparency into deficit numbers, by moving off-budget items into the stated deficit.

This Budget’s estimates (nominal growth of 11.1 percent, disinvestment receipts of Rs 65,000 crore) are caution, conservative, achievable and believable. What should be the form of that public expenditure have? Every economist will argue in favour of capital expenditure, with the caveat that revenue expenditure for the Union government (grants-in-aid) can become capital expenditure for state governments. That’s precisely what this Budget has done. Something like PM Gati Shakti (with seven engines) is about transport connectivity, adding to the productive potential of the economy, generating growth and employment, reducing poverty.

If there is an enabling framework for growth and ease of doing business, why should there not be employment creation, much more than the 6 million in five years, mentioned for 14 sectors that have the production-linked incentive scheme? Like the Budget for 2021-22, this Budget also sets out a vision, this one being for India in 2047. It is a direction this government has followed since May 2014 and the pandemic doesn’t mean there is reason for deviating. Add to that the power of digital technology in eliminating asymmetry of information, helping the disadvantaged and facilitating ease of doing business and ease of living.

If COVID-19 and the resultant dislocation did not hurt India much more, that was because of what the government has done, since May 2014, for the rural sector. This has been catalogued several times, including in Economic Survey. The Budget specifically mentions housing, electricity, cooking gas and access to water. This represents welfare, inclusive development and empowerment. Success in delivering these (now being extended to urban India) render doles and hand-outs superfluous.

The author is the chairman of the Prime Minister’s Economic Council and a well-known Sanskrit scholar. The views expressed are personal.

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Petrol, diesel prices today: Rates unchanged on 2 February, check here what you need to pay in your city

Petrol and diesel prices remained unchanged in the country on Wednesday, 2 February.

In Delhi, fuel is relatively cheaper than the rest of the metros because the state government had earlier decided to reduce the Value-Added Tax (VAT) on petrol, bringing down the price of the fuel in the city by about Rs 8 per litre.

At a cabinet meeting chaired by Chief Minister Arvind Kejriwal, it was decided that the VAT on petrol will be reduced from the present 30 percent to 19.4 percent, leading to a cut of around Rs 8 per litre, officials said.

The price of petrol after the VAT cut will go down from the current Rs 103 per litre to Rs 95 per litre, sources told PTI.

Earlier, the petrol price in Delhi was higher as compared to the NCR cities in Uttar Pradesh and Haryana, where the state governments had announced a VAT cut following the Centre reducing the excise duty on fuel prices.

The Centre had on the eve of Diwali, announced excise duty cut on fuels resulting in a sharp decrease in petrol and diesel prices across the country. The government had cut the price of petrol by Rs 5 and that of diesel by Rs 10. Following this decision, several states, mostly ruled by National Democratic Alliance (NDA) and allies have also cut the Value Added Tax (VAT) on petrol and diesel prices.

Opposition-ruled Punjab and Rajasthan also followed the cue to announce the biggest reduction in petrol prices. Petrol price in Punjab was further reduced by as much as Rs 16.02 per litre and diesel by Rs 19.61 a litre as a result of the combined impact of the excise duty and VAT cut, according to price lists shared by state-owned fuel retailers. VAT on petrol price was cut by Rs 11.02 while that in diesel was cut by Rs 6.77 in the state. In Ladakh, diesel saw the most reduction as rates have come down by Rs 9.52 per litre. This is because of a cut in VAT on top of Rs 10 a litre fall in excise duty.

In Delhi, petrol costs Rs 95.41 a litre while the rate of diesel was Rs 86.67 per litre.

In Mumbai, petrol can be bought at Rs 109.98 per litre and diesel costs Rs 94.14 for one litre.

In Chennai, a litre of petrol is priced at Rs 101.40. On Wednesday, the price of a litre of diesel was Rs 91.43 per litre.

Also Read: Click here for Petrol Price

Petrol in Kolkata costs Rs 104.67 per litre while diesel costs Rs 101.56 a litre.

While petrol can be bought at Rs 107.23 in Bhopal, which is a cut by Rs 6.27, diesel costs Rs 90.87 per litre.

Following are the prices of diesel and petrol in a few metros and Tier-II cities in the country:

1. Mumbai

Petrol - Rs 109.98 per litre
Diesel - Rs 94.14 per litre

2. Delhi

Petrol - Rs 95.41 per litre
Diesel - Rs 86.67 per litre

3. Chennai

Petrol - Rs 101.40 per litre
Diesel - Rs 91.43 per litre

4. Kolkata

Petrol - Rs 104.67 per litre
Diesel - Rs 89.79 per litre

5. Bhopal

Petrol - Rs 107.23 per litre
Diesel - Rs 90.87 per litre

6. Hyderabad

Petrol - Rs 108.20 per litre
Diesel - Rs 94.62 per litre

7. Bangaluru

Petrol - Rs 100.58 per litre
Diesel - Rs 85.01 per litre

8. Guwahati

Petrol - Rs 94.58 per litre
Diesel - Rs 81.29 per litre

9. Lucknow

Petrol - Rs 95.28 per litre
Diesel - Rs 86.80 per litre

10. Gandhinagar

Petrol - Rs 95.35 per litre
Diesel - Rs 89.33 per litre

11. Thiruvananthapuram

Petrol - Rs 106.36 per litre
Diesel - Rs 93.47 per litre

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Virtual digital asset: How Union Budget 2022 brings cryptocurrency within tax net

The Union Budget 2022 announced on Tuesday by Finance Minister Nirmala Sitharaman has finally brought in a lot of clarity on how cryptocurrency will be taxed from Financial Year 2022-23, which is the Assessment Year 2023-24. Along with bringing clarity on taxation, the Finance Minister has also clarified that the Government of India doesn’t consider cryptocurrency as a currency, but shall treat it as a virtual digital asset. This removes all doubts on whether cryptocurrencies would become a legal tender or a medium of exchange in the future or not. In other words, the Government of India would treat cryptocurrency as an investment.

Another important fact that comes out from the text of the proposed provision in Section 115BBH of the Income Tax Act, 1961, is that the Government and Revenue Department doesn’t consider virtual digital assets aka cryptocurrencies as an investment or capital asset. Hence, it is taxing cryptocurrencies at the highest marginal rate of 30 percent, instead of offering any benefits allowed to capital assets like real estate or financial securities that are taxed at a lower rate and allowed benefits of indexation.

Questions that prevailed on the issue of taxation of cryptocurrencies were:

1.     Whether profits and gains on investing in cryptocurrencies would be treated as business profits or capital gains?

2.     How would the cost of mining cryptocurrencies be ascertained and whether it would be treated as a cost of acquisition, and hence eligible for deduction from sales proceeds arising on sale of cryptocurrencies?

3.     How would receipt of airdrops be treated?

4.     What is the point of taxation in case of mining or receipt of airdrops?

5.     Whether losses arising from trading or investments in cryptocurrencies will be allowed to be set off against income from all other sources?

The Union Budget 2022 has not just addressed all these queries and but has also gone a step ahead in bringing all transactions of cryptocurrencies aka virtual digital assets within the tax net by providing for deduction of tax at source at the time of transfer of cryptocurrency for a consideration in cash. This article shall discuss provisions in the Finance Bill, 2022 that address the concerns raised in the aforementioned questions.

By including taxation of cryptocurrencies in Chapter XII of the Income Tax Act, 1961, instead of Chapter IV, the government has given clear indications that it doesn’t consider trading and investment in cryptocurrencies as a normal business activity.

Instead, the government considers transactions in cryptocurrencies as a “Special Case” and hence is being taxed differently. Income or profit arising from the transfer or sale of cryptocurrencies shall be proposed to be taxed at a rate of 30 percent instead of being taxed at normal slabs or as capital gains. Here again, the government has allowed the cost of acquisition of cryptocurrencies as a deduction for the calculation of profits and gains arising from the sale of cryptocurrencies.

The Finance Bill expressly mentions that no deduction in respect of any expenditure, other than the cost of acquisition, shall be allowed as a deduction. Hence it can be safely assumed that the Government does not consider the cost of mining the cryptocurrency. This would be a cause of concern for miners who invest heavily in hardware and electricity to solve complex algorithms to mine cryptocurrencies, and would not get a deduction on account of these expenditures incurred to earn those cryptocurrencies.

***

Also Read

Union Budget 2022: India introduces 30% cryptocurrency tax; how it will affect you

Budget 2022: All you need to know about Digital Rupee announced by FM Sitharaman

***

Airdrops are cryptocurrencies received by traders from issuers of cryptocurrencies to create liquidity in the said cryptocurrencies. This is done to generate investor and trader interest in the said cryptocurrencies on the back of higher volumes.

The government has not expressly mentioned Airdrops but has only mentioned gifts, which could mean that Airdrops would be deemed to be treated as gifts.

In case of receipt of cryptocurrencies as gifts from friends and/or relatives or from issuers of cryptocurrencies in from of Airdrops, the Government has clearly indicated the legislative intent that the said income in form of cryptocurrency received as gift or Airdrop will be taxed at the time of receipt. This is done by amending Explanation to clause (x) of sub-section (2) of section 56 of the Income Tax Act, 1961 to inter-alia, provide that for the purpose of the said clause, the expression “property” shall have the meaning assigned to it in Explanation to clause (vii) and shall include virtual digital asset, that is cryptocurrency.

Hence, the recipient of cryptocurrency will have to pay a tax of 30 percent on the fair or market value of the cryptocurrency at the time of receipt. If this explanation is taken as a base for understanding how cryptocurrencies mined would be taxed, then it can be safely assumed that cryptocurrencies mined would also attract tax in the assessment year in which it is mined.

The Finance Bill is also categorically clear on the issue of set-off of losses arising from cryptocurrency transactions. It states that no allowance or set-off of any loss shall be allowed to the taxpayer under any provision of the Income Tax Act, 1961 while computing income from the sale of cryptocurrencies. This is one more piece of evidence that the government and revenue department consider income arising from trading or mining or investment in cryptocurrencies as a “Special Case” and not as a part of the normal income earned either as a business activity or as an investment.

These clarifications about taxation of cryptocurrencies aka virtual digital assets, as the government wants it to be addressed, come at the right time. It especially becomes extremely important because around 10 crore individual investors have invested around Rs 6 lakh crore in various cryptocurrencies, as per the advertisement issued by The Blockchain and Crypto Assets Council which is a part of the Internet and Mobile Association of India. It is also worth noting that Non-Fungible Tokens (NFT) is also considered as a virtual digital asset and will be taxed exactly the way cryptocurrency is proposed to be taxed.

The author is a Chartered Accountant by qualification and a Corporate Finance Professional. He is the author of ‘Diagnosing GST for Doctors’ published by CNBC Books18. Views expressed are personal.

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Union Budget 2022: Underestimating tax revenues for the second year in a row by finance minister is puzzling

Finance Minister Nirmala Sitharaman’s Budget is clearly focused on capex-driven growth, even if it comes at the cost of a higher deficit. But what is surprising is the FM could have gone for growth even without declaring a large fiscal deficit. This is because the Budget seriously underestimates tax revenues for the second year in a row.

The Budget itself recognises some of the underestimations. In the last year’s budget, the Centre’s net tax revenue growth in the current year — FY22 — was estimated to grow by 8.5 per cent to Rs 15.45 trillion. Today, in the revised estimates for FY22, the Budget admits tax revenues are likely to grow by 24 per cent to Rs 17.65 trillion.

Now even this is an underestimation, and here’s why: For the April-December period, the net tax revenue of the Centre is at Rs 14.74 trillion, up 50 per cent from Rs 9.6 trillion in the same period in 2020. Now, for Jan-March 2021, the government collected net tax revenue of Rs 4.6 trillion. Even assuming the government collects the same amount in Jan-March of 2022, the net tax revenue to the Centre in the current year will be Rs 19.5 trillion and not 17.65 trillion as mentioned in the revised estimates. And if tax revenues were to grow in Jan-March by the same pace as in the first nine months, the net tax revenue this year may easily go over Rs 20 trillion, which means a good Rs 3 trillion more than the revised estimates!

If the FY22 net tax revenue is higher by Rs 3 trillion, it stands to reason that next year’s net tax revenue may also be at least Rs 5 trillion more due to the base. Indeed, the government has assumed a net tax revenue growth of 9.6 per cent.

Yes, next year, the government revenues may be impacted by the cut in excise duties on fuels. But if corporate and income tax and GST were to grow at 1.3-1.4 times the nominal GDP (which is seen growing by 13 percent), then next year’s net tax revenue can easily grow by 15 per cent. This means next year’s net tax revenues have been underestimated by at least Rs 4 trillion.

At the press conference, the finance minister and the key secretaries argue they are being realistic. The FM added she prefers to be a little conservative and over-achieve. Now, an underestimation of revenues by Rs 4 trillion or by 25 per cent is not conservative, but downright harmful.

By estimating tax collections lower, the government has probably overestimated the deficit. It has calculated the fiscal deficit at Rs 16.65 trillion against market expectations of Rs 15.5 trillion.

Likewise, the government's market borrowing has been estimated at Rs 14.3 trillion, versus market estimates of Rs 12 tillion at the most. The spectre of the government selling nearly Rs 35,000 crore of bonds every week from April has scared the bond market, and the 10-year bond yields have shot up from 6.68 per cent pre-Budget to 6.85 per cent post-Budget presentation.

This will only increase the borrowing cost for the government and indeed for the entire economy since corporate loans are priced about 30-50 basis points above government bonds. The market was hoping there would be some announcement of including Indian bonds in the global indexes, but that was scotched in the press conference by the revenue secretary Tarun Bajaj.

Some more puzzling questions remain 

The tax collections of last year were used up in recognising the government’s dues to the Food Corporation. This year some of the excess collections are being used up for paying the dues of Air India. The market is now worried if next year’s likely higher-than-expected tax collections will also be used up to correct some unrecognised dues.

The short point, the finance ministry would do well to explain the rationale behind its persistent under-estimation of taxes. Why aren’t they recognising an obvious increase in India’s tax-to-GDP ratio? Do they know something the market doesn’t know? Or if it is plain conservatism, aren’t they worried that the government and the economy are paying the price for this unwarranted conservatism?

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