The trouble is that the tax burden is being passed on to a class that has no work to do in its hands and whose pockets and stomachs are empty. Tax exemption is being given to that class, whose safes are full and he is putting his money in other countries. If this is not a virtue, what would you call it?
It is meaningless to imagine an economy without income and a river without water. If the sources dry up, then the existence of both of them is in danger. India’s economy is moving in the same direction. The per capita annual income (constant value) based on Net National Income (NNI) was recorded at Rs 91,481 during the financial year 2021-22 as against Rs 94,270 in the pre-pandemic financial year 2019-20 and Rs 92,241 in 2018-19. less than income.
During the pandemic (2020-21), the annual income had fallen to Rs 85,110. That is, the per capita annual income in the country has decreased instead of increasing during the last five years. While inflation almost doubled during the same period. In the financial year 2018-19, the retail inflation based on the Consumer Price Index (CPI) was 3.4 percent. The retail inflation rate for the current financial year (2022-23) is estimated at 6.7 per cent. Retail inflation was recorded at 7.04 per cent in May. The pace of wholesale inflation is further accelerated. In May 2018, the inflation rate based on the Wholesale Price Index (WPI) was only 4.43 percent, which reached a thirty-year high i.e. 15.88 percent in May 2022.
The matter does not end here. The report of Oxfam India says that during the epidemic, the income of eighty-four percent of the people decreased. While the wealth of the country’s billionaires increased from Rs 23.1 lakh crore to Rs 53.2 lakh crore in the same period, which is more than double the increase. The number of billionaires also increased from one hundred two to one hundred and forty two. Seventy seven percent of the country’s wealth was occupied by the richest ten percent of the people and the total wealth of the country’s ninety-eight billionaires became equal to the combined wealth of 555 million general population.
According to the survey report of People’s Research on India’s Consumer Economy (PRIC), the income of 20 percent of the poorest households in the country decreased by three-three percent during 2020-21 as compared to 2015-16. In the same period, the income of lower middle class families decreased by thirty-two percent and that of middle-class families by nine percent. Whereas the income of upper middle class families increased by seven per cent and the income of the richest twenty per cent families increased by twenty nine per cent.
Obviously, the current economic policies of the country are not friendly to the common man. On the one hand the number of billionaires is increasing, on the other hand the size of the middle class is decreasing and the scope of poverty is increasing. In the language of economics, it is called ‘K’ shaped growth of English. Another 23 crore people in the country went into poverty in one year during the pandemic. No data is available on how many of these came out of poverty. But free ration to eighty crore people still gives an idea of poverty figures. If such a large population of the country is dependent on free ration, then what tag of progress would be called it!
Despite the lack of demand in the market due to unfavorable policies, inflation is sky high, and unemployment is at its peak. Initially, the general public bears the brunt of wrong policies, but later the economy also comes under wraps. Today the income of the government is also decreasing. The fiscal deficit is increasing. The fiscal deficit target for the fiscal year 2022-23 was set at 6.4 per cent of the gross domestic product (GDP).
But now policy-makers are talking about staying at last year’s level i.e. 6.7 percent. The country’s foreign exchange reserves have come down below 600 billion dollars due to the rise in crude oil in the international market, disrupted supply chain and historical devaluation of the rupee. External debt increased by 8.2 percent to $620.7 billion as of March 22 from last year. Inflationary pressure has remained constant. Fiscal measures will have to be taken to deal with this. As a result the fiscal deficit will increase.
In May this year, excise duty on petrol, diesel was reduced by Rs 8 and Rs 6 respectively. This will result in a revenue loss of one lakh crore rupees. Under the Ujjwala scheme, giving a grant of Rs 200 per cylinder will reduce the revenue by Rs 6,100 crore. Revision of customs duty on iron, steel and plastic will reduce revenue by ten to fifteen thousand crore rupees. The increase in subsidy on fertilizers has increased the burden of Rs 60,939.23 crore on the exchequer in the first half of the financial year itself. In view of the financial crunch, the Department of Expenditure of the Ministry of Finance has now recommended the closure of Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) after September 2022.
The government has two sources of revenue – tax, and non-tax sources. Direct taxes and indirect taxes come under tax. Direct taxes include personal income tax and corporate tax. Indirect taxes include GST, Customs Duty and TDS. Non-tax sources include dividends and earnings of public sector companies (PSUs). Since the government is following the policy of privatization and disinvestment, dividend and earnings of PSUs are not on its agenda.
The disinvestment situation is also in turmoil due to the unstable economic environment. In the financial year 2021-22, only eight percent of the disinvestment target of Rs 1.75 lakh crore i.e. Rs 13,561 crore was achieved. The disinvestment target for the current fiscal is Rs 65,000 crore, but even this target seems far-fetched due to the failure of Life Insurance Corporation of India’s (LIC) IPO. In such a situation, the full emphasis of the government is on tax collection, that too on indirect taxes (GST, excise duty, customs duty).
The root of the ‘K’ shaped economy starts from here, as the indirect taxes are paid by the general public. During the financial year 2021-22, a record GST collection of Rs 6.19 lakh crore was made, which is more than the revised budget target of Rs 5.70 lakh crore. High inflation rate is one of the major reasons behind record GST collection despite lack of demand in the market. Nevertheless, the government has decided to increase the GST rate. Many goods, services were brought under the purview of GST, then the rates of GST have been increased on many goods and services. The new rates will be applicable from July 18. Due to this inflation will increase further, the general public will pay.
The trouble is that the tax burden is being passed on to a class that has no work to do in its hands and whose pockets and stomachs are empty. Tax exemption is being given to that class, whose safes are full and he is putting his money in other countries. If this is not a virtue, what would you call it? In 2020, the corporate tax was reduced from thirty to twenty-two percent, causing a loss of annual revenue of Rs 1.45 lakh crore.
The argument is that even after the corporate tax cut, the direct tax collection is increasing. It is obvious that the income of the rich will increase, the number of billionaires will increase, so the direct tax collection will also increase. But even this direct tax collection is being paid by the general public through the rich. The question is, for how long will the common man continue to be a source of income? As long as he deserves it, only then! In a public welfare state, collecting more tax from the poor general public is not a good omen.