Taxes always go up. So why worry about the budget?

The new Finance Minister Nirmala Sitharaman will present a budget on 5 July and "all eyes will focus on the fiscal deficit number", wrote N Kwatra. "Over the past few years, the government has managed to keep the headline fiscal deficit number under check" by "growing use of off-budget financing". So, "if these expenses were to be included in fiscal calculations, India is already in a deep fiscal hole, with the 'adjusted' fiscal deficit hovering near 5% of India's gross domestic product (GDP)". "Data from the Controller General of Accounts (CGA) show that the government reversed about Rs 700 billion of its incurred expenditure on subsidies in 2018-19 and about Rs 420 billion in 2017-18 just before the end of the respective fiscal year." "Macroeconomic indicators, hitherto conflicting, are all now consistently reflecting a severe growth slowdown," wrote Prof S Mundle. "Growth revival will depend critically on the growth of investment and exports." What exports? India's trade deficit was a record $176 billion in 2018-19, and this financial year has started on a similar note with the trade deficit hitting a 6-month high of $15.4 billion in May. "So a large boost to public investment in employment-intensive rural infrastructure, especially rural roads, minor irrigation, rural housing, etc., should be high on the government's agenda." They are. Prime Minister Modi plans to spend Rs 100 trillion in the next 5 years on infrastructure, of which Rs 30 trillion will be spent on the transport sector, to create jobs. Rs 6,000 will be handed out to all farmers every year and a pension of Rs 3,000 will be given to "farmers, shopkeepers, retail traders and self-employed persons" on reaching the age of 60 years. To spend so much the government needs revenues but according to a Reserve Bank (RBI) survey, people's intention to spend "on non-essential items has fallen to an all-time low since September 2015". It is not just that "Passenger vehicle sales declined by 20.55% in May compared to the same period last year, logging the steepest fall in 18 years", but sales of "toilet soaps, hair and edible oils, milk food drinks and salt fell in absolute terms" in 2018. Falling sales mean a fall in indirect tax collections, which, in turn, means a severe abuse of people through extreme tax terrorism. People are so terrified and harassed by tax officials that they pay unjustified taxes just to get relief from their clutches. The government has shown revenues by selling one public sector unit to another so that "Over the last 18 months, as the need to meet disinvestment targets became urgent, such ideas ended up destroying 18-20% of the Nifty Public Sector Enterprise (PSE) index value even as the overall stock market has risen," wrote R Jagannathan. Minority shareholders have suffered but there is nothing they can do. Since money doesn't grow on trees the budget will be smoke and mirrors, as always. Same to same, as we say in India.