No easy job for PC in interim budget today

Union Finance Minister P Chidambaram will have to do a tightrope walk as he is expected to announce sops to kick-start the laggard economy, reach out to women by decreasing duty on gold when he presents the Interim Budget in Parliament on Monday.

This would be the final budgetary exercise of the Congress-led UPA government, but Chidambaram may utilise the occasion to outline a vision for the future which could be used by the new government to hit back to the high-growth trajectory.

However, the government’s hands are tied as it would be unable to provide any direct tax benefits to the citizens as this would be an interim budget, merely aimed at keeping the government finances running till a new government assumes office.

There could be sops in store for the auto industry by way of reduced excise duty and some incentives for the consumer goods sector which had witnessed slow growth in the recent times.

A key aspect of the previous budget – an additional 10 per cent surcharge on the super rich – is set to lapse this year. Chidambaram had levied the additional tax for those individuals or entities having a taxable income of Rs 1 crore or more. This surcharge was for a period of one year. Presenting the interim budget in 2009, the then finance minister Pranab Mukherjee had highlighted how the common man was brought to the centre-stage by the UPA. In 2004, the interim budget was presented by Jaswant Singh. Chidambaram referred to both the interim budgets in a recent interaction with the media and said he could make any proposal short of amending any law.

The minister is expected to use the opportunity to highlight the achievements of UPA-II government and focus on how the government has been able to contain the fiscal deficit and the current account deficit (CAD), notwithstanding the difficult global situation.
The full budget will be presented by the new government some time in June or July.