Click to play videoNew Delhi: Political parties who have promised voters the moon will now be hoping that voters take the bait and cast votes in their favour. Mike Sangma takes a look at how BJP's is hoping a come back riding on its promises to pamper the 'aam admi'.
In the last five years, the Congress's mantra has literally been "tax and spend." Former finance minister P Chidambaram has had a fetish for introducing new taxes - whether fringe benefit tax, securities transaction tax, or the just-abolished banking cash transaction tax.
But the BJP, in its manifesto, is promising big tax breaks. These include raising income tax exemption to Rs 3 lakh a year, rationalisation of Fringe Benefit Tax, one rank, one pension for ex-servicemen and education loans subsidised at a four per cent interest rate.
The message is loud and clear - it will not tax you to vote the BJP into power. But does the aam admi feel the incentive is sufficient?
“It is very nice that there is going to be some deduction of taxes somewhere but at the same time it is also interesting to know how these people will make up for the deficit otherwise definitely you are going to feel the pinch somewhere or the other,” says a Delhi resident.
But most feel that these promises come up only during election times and that promises are meant to be broken.
Economists too have big reservations on BJP's course of "spending without taxing". If implemented, it could blow a hole in the government's finances - the size of one per cent of GDP.
By proposing to raise the tax free limit, the BJP would move about 1.5 crore assessees from the tax net - a loss of Rs 22,500 crore.
The abolition of fringe benefit tax could shave off another Rs 10,200 crore, which was the budget estimate for this year.
One rank one pension for ex-servicemen is estimated to cost between Rs 1,500 cr and Rs 5,000 cr.
“We are in a situation where the fiscal deficit has gone completely out of control. So if these tax sops are given by enhancing the limits from Rs 1.50 –Rs 3 lakh, you have to look at what the impact is on the fiscal deficit,” Mukesh Butani of BMR Advisors.
While some see it an added burden on India's growing fiscal deficit, party supporters view it as another stimulus package. But the consensus is that since the BJP is unlikely to be voted to power on its own, it could just wriggle out of executing some of these fiscal promises, saying they do not bind the NDA.
(For updates you can share with your friends, follow IBNLive on Facebook, Twitter, Google+ and Pinterest)
More on IBNLive Right Now
MOST SHARED
PHOTOGALLERY
