But the finance minister did little to wipe the tears of over one billion people who are reeling under the impact of rising prices. He rather added to their sorrows by widening the indirect tax base to include more commodities and services, which would have a cascading effect on price inflation.

Government’s massive cut in its total subsidy by Rs 20583.30 crore (Rs 205833 million) for the year 2011-12 from what was spent in 2010-11 has come as a rude shock at this time of rising prices. Food subsidy has been reduced by Rs 26.55 crore (Rs 265.50 million), petroleum subsidy has been cut by Rs 15000 crore (Rs 150000 million) and fertiliser subsidy by 4978.81 crore (Rs 49788.10 million).

The finance minister’s refusal to reduce excise and customs duty on petro products and to move away from the ad-valorem duty structure coupled with the massive cut of Rs 15000 crore (Rs 150000 million)in petroleum subsidy indicate hefty increases in prices of petro products in the country in the days to come as the global crude prices are on a rising trend. If this happens then the prices of essential commodities would peak to new levels.

As a relief to the general category of taxpayers, the exemption limit has been raised from Rs 160,000 to Rs 180,000 a year. The employees in the organised sector are now free from the hassles of filing their income tax returns which would be done by the employer. But this relief is likely to be nullified soon by the rising prices of essential commodities.

Next trying to show his sympathy for the senior citizens the finance minister reduced their qualifying age from 65 years to 60 years and raised their tax exemption limit from Rs 240,000 to Rs 250,000. A new category of Very Senior Citizen has been created with the qualifying age of 80 years and above and tax exemption limit for this category has been fixed at Rs 500,000. There are only about 15,000 taxpayers who of the age of 80 and above and the government has not much to loose by exempting these people.

The government’s proposals on direct taxes are estimated to result in a net revenue loss of Rs 11,500 crore (Rs 115,000 million). The revenue loss is mainly due to the concessions given to the corporate houses like reduction in surcharge to 5%, marginal increase in the minimum alternate tax to 18.5%, tax rebate on notified infrastructure debt fund and infrastructure bonds, lower rate of 15% tax on dividend received by an Indian company from its foreign subsidiary, benefit of investment linked deduction to fertiliser and housing industry, rather than the benefits given to individual taxpayers.

Pranab Mukherjee has followed the age-old trick of robbing Peter to pay Paul. He robbed consumers through indirect taxes to make good the losses suffered in benefiting the corporate houses.

“My proposals on direct taxes are estimated to result in a revenue loss of Rs 11,500 crore (Rs 115,000 million) for the year. Proposals relating to indirect taxes are estimated to result in a net revenue gain of Rs 11,300 crore (Rs 113,000 million), leaving a net loss of Rs 200 crore (Rs 2000 million)in the Budget,” the finance minister admitted.

Government’s budgetary proposals relating to central sales tax, customs and central excise duty would result in a revenue gain of Rs 7,300 crore (Rs 73000 million), while those relating to service tax would result in a revenue gain of Rs 4,000 crore (Rs 40000 million).

While Pranab Dada’s Union Budget is price inflationary in character due to the wider incidences of indirect taxes, Mamata Didi’s Railway Budget is well caliberated to cushion against the impact of rising prices. Didi has not effected any hike in passenger and freight rates. Novel method of involvement of private sector in rail-based industries will explored to further the social and economic objectives of the railways. Increase in suburban services and metropolitian services would be substantial revenue earners.

The finance minister has extended central excise duty to cover 130 additional items, mainly consumer goods and when Goods and Services Tax would be introduced another 240 new items would be brought under the tax net. Branded items of gold, silver and precious metal and branded readymade garments and textiles made-ups will be costlier due to excise duty.

The lower rate central excise duty would be raised from 4% to 5% .The peak rate of customs duty would remain at 10%.

The entire Budget is oriented towards encouraging investment and liquidity of money by making loan accessible even in rural areas and the corporate houses and the capital market have responded well to the budgetary proposals. The government feels that by encouraging investment and liquidity, the current rate of economic growth can be sustain. But the situation may cause sharp rises in prices if adequate measures are not put in place.

As per the Statement of Revenue Foregone, total tax concessions reached over Rs 5 lakh crore in 2010-11, with corporate tax exemptions totaling over Rs 88000 crore (Rs 880000 million). The tax-GDP ratio, which reached had reached almost 12% in 2007-08, has declined to around 10% in the current Budget. When income disparity is widening fast, decline in tax-GDP ratio indicates waning commitment towards redistributive economic justice.

The Budget has made lip service in making routine allocations to different scheme in agriculture which are meagre and not sufficient enough to benefit 750 million farmers in over 600,000 revenue villages. No effort has been made to encourage unemployed rural youth to set up agro-processing and value addition units, warehouses and cold storage in rural areas. Healthcare and education facilities in rural areas remain in a pitiable state.

Government is lacking in sincerity in bringing back the ill-gotten money of Indians stashed away in about 15 German and Swiss banks in Liechtenstein Island. Noted lawyer, Ram Jethmalani who has filed a PIL in the Supreme Court has estimated $1500 billion illegally stashed away in LGT and other foreign banks. The Global Financial Integrity has estimated the amount at $462 billion.

According to Jethmalani if the total ill-gotton money is brought back it would wipe out all the debts of the country, each family would get Rs 2.5 lakh each and there would be a tax-free Budget for next 30 years. This would also help the common man in the country to combat price inflationary pressure and increase job opportunity in the country.