The Budget itch needs a cure.

With the annual budget to be presented at the end of the week speculation on its contents has reached feverish levels. "Tax collections in the current fiscal may fall short of targets by Rs 2 lakh crore (Rs 2 trillion) on a faltering economy, leaving very little room for Finance Minister Nirmala Sitharaman for offering any meaningful reduction in personal income tax rates." Direct tax collection will be short by Rs 1.5 trillion and indirect taxes by Rs 500 billion, so taxpayers can forget any reduction in tax rates. But, already an increase in handouts is being predicted. "The Center is proposing a major revamp of the National Social Assistance Programme (NSAP) that could raise pension payouts for senior citizens, widows and those with disabilities." Pensions will be raised to Rs 1,000 from Rs 500 per month for those older than 80 years of age and to Rs 500 for those up to 79 years of age. This only applies to those below the poverty line (BPL) but even then these paltry amounts will barely pay for food or medicines, but not both, but it will add to spending. Revenue expenditure, which is comprised of interest payments on previous debt, salaries and pensions of central government employees and subsidies, will be Rs 3.80 trillion more than revenue receipts, wrote Omkar Goswami. Rs 2.70 trillion will go on salaries and pensions and at Rs 8.29 billion "the cost of maintaining our Cabinet Secretariat in 2019-20 will be only 4% less than running Dadra and Nagar Haveli". To raise money, "India plans to increase import duties on more than 50 items, including electronics, electrical goods, chemicals and handicrafts, targeting $56 billion worth of imports from China and elsewhere, officials and industry sources said." The government might be gambling that since we export so little, it will not lose much if our trading partners levy retaliatory tariffs on our exports. Our trade deficit was an eye-watering $176 billion in 2018-19 so a fall in imports could be more than the fall in exports. In the last budget personal income taxes were increased so expecting a reduction makes little sense. A 10% long term capital gains tax on the sale of shares was added to securities transaction tax (STT) in 2018, now there maybe a reduction in that tax. The government needs to find more revenue, but with the nominal growth of the gross domestic product (GDP) falling to 7%, tax collections are bound to fall. If the Finance Minister predicts growth in nominal GDP at higher than 10% "it can only mean that either she is misleading us, or that the government is looking to increase tax rates substantially in the course of the year. or that the tax harassment of business and individuals is only going to intensify in an effort to increase tax collections, or a combination of these," wrote Praveen Chakravarty. Constant changes in tax laws, along with tax terrorism, means that companies and individuals cannot plan for the long term. If the government really wants the economy to improve, with increased consumer spending and higher private sector investments, tax rates and rules have to remain constant, wrote Lubna Kably. Get rid of the itch to change things. It creates confusion, not wealth.