Honourable Speaker, after the general elections, we have taken several decisions.
First, Budget speeches are restricted to 500 words and five minutes, with an additional two minutes for poetry quotes. There is nothing to say. Constitutional requirements of Part B of the speech are placed before Parliament.
Second, since policy announcements should happen outside Budget, our government has scrapped Part A.
Third, we have dismantled the extraconstitutional authority known as the Planning Commission and all fund flows to states will be through the Finance Commission. We are about to set up the 14th Finance Commission, having implemented recommendations of the 13th. We have abolished artificial distinctions between Plan/non-Plan and revenue/capital expenditure. There will be a rolling Budget. With nominal GDP growth of 15 per cent in 2014-15, BE fiscal deficit/GDP is 3 per cent and revenue deficit/GDP is 0 per cent. Before Members complain deficit numbers are high, I should say these are revamped deficit figures, with all off-Budget items now part of deficit calculations.
Fourth, recommendations of Central and State Finance Commissions have become mandatory. This ensures fund flows to local bodies and the Seventh Schedule have been revised, abolishing the Concurrent List. Instead, we have the UnionList, State List and Local Body List.
Fifth, after the Direct Tax Code was implemented in 2011-12, all personal and corporate tax rates have been standardised, with no exemptions. I am happy to report that the number of income-tax payers (not assessees) has increased to 50 million and the effective corporate tax rate is 30 per cent. Nothing other than income is taxed.
Sixth, after General Sales Tax (GST) was implemented in 2011-12, all exemptions have gone for indirect taxes too, and we have a revenue-neutral GST rate of 20 per cent—7 per cent Central, 5 per cent State and 5 per cent Local Bodies. All Local Body taxes, including stamp duties, have gone and compliance costs and tax-related litigation have dropped. Net revenue, after deducting collection costs, has increased to 80 per cent. (There are few visitors to North Block now.) Tax/GDP ratio is 21 per cent.
Seventh, subsidies (fertiliser, food, petroleum) have been replaced by direct, but conditional, cash transfers and States have done the same for education and health. Using UID numbers and decentralised identification based on individual socio-economic criteria, BPL households have been unambiguously identified and non-BPL households don't receive subsidies. In its final report, the Planning Commission found 66 per cent of every rupee spent on anti-poverty programmes reaches target beneficiaries. APM for petroleum products stands scrapped.
Eighth, on expenditure side, interest payments, salaries and pensions and defence expenditure are the items. Every other item of public expenditure trickles upwards through district planning and instead of centralised flagships, we now have decentralised flotillas. This enabled us to reduce the number of central government ministries to 11 and there is no concept of Minister of State. The resultant savings permitted public expenditure on education to increase to six per cent of GDP, while that on health to three per cent. Defence expenditure constitutes four per cent.
You will accordingly find Budget documents much slimmer and we will not need more than half a day's discussion to pass the Finance Bill since there is nothing to change. If Parliament approves, from 2015-16 we will place Budget in the public domain even before it is placed before Parliament.
Poetry Quote: "Carpe diem quam minimum credula postero" (Seize the day, trusting the future little)—Horace, Odes, 1.11.
— The writer is an economist.