Fiscal Policy

The new budget to be presented in the parliament on March 16th is expected to bring few surprises. Here are some of those projected measures. Amnesty Scheme to track parallel economy Perhaps, the most desirable one is the launch of an amnesty scheme like VDIS to tap tax revenue out the gigantic quantity of black money existing in the country. On this front, the government should initiate supplementary actions to unearth unaccounted money parked in foreign countries. The VDIS 1996 has given Rs 10000 crores tax revenue to the government. Hence, now given the high fiscal deficit condition in the budget, the launch of an amnesty scheme will be fruitful. Direct taxes: Personal incom

One of the toughest decisions that the government must take in this years’ budget is on the diesel price front.  The diesel subsidy is an issue on many grounds.              Firstly, for the government’s budget, the fiscal deficit may overshoot its expected target at least by 20%. This means that the government has to contain the fuel subsidy bill by bringing it more near to the real cost. During the last year, the government has allocated Rs 23640 crores for fuel subsidy. But as per the first hand estimates, the actual figure may reach nearly thirty five thousand crores for the current year.   

Budget for 2012-13 is scheduled to be presented in the Parliament on 16th of March. This year’s budget is  going to be a critical one for the government as well as for the economy in many respects. Firstly, the national and global environment is difficult and this situation may put pressure on revenue front. Similarly, on the expenditure front, the government should carryout expenditure compression measures, given the possibility of tax revenue under-realization.             An interesting pre-budget development is the CSO’s downward revision of GDP growth target to 6.9% for the current year. This rate is th