New Delhi, Feb 19 (UNI) An estimated record tax collection of more than Rs 6,00,000 crores this fiscal, will give enough leeway to Finance Minister P Chidambaram to dole out enough money in Budget 2008-09 for social sector programmes, agriculture, rural employment and sops to industry reeling under a global slowdown.
North Block mandarins say the record tax haul, the highest since independence, will exceed the Budget Estimates of Rs 5,48,122 crores for the year.
The impending General Elections in 2009 would necessitate large spending on social sector programmes like education and health to make a visible impact on the common man. The hard earned lessons of the 'India Shinning' compaign which backfired on the NDA government in the last elections have not been forgotten.
The man on the street could not relate to splendid achievements that were projected by the government of the day which projected in its campaigns the success of the telecom revolution and other goodies which were available to the rich and the middle classes. The masses were deprived all of these.
The National Common Minimum Programme(NCMP) took a cue from this massive failure and gave thrust to social sector programmes and revival of agriculture. There is now almost a consensus view that unless the agriculture sector grows by at least four per cent per annum it would be well neigh impossible to sustain a growth rate of eight per cent plus in the years to come, if not more.
Mr Chidambaram will also be compelled to earmark the largesse that will be shelled out to Central government employees by way of the Sixth Pay Commission. The figure in this regard could touch Rs 36,000 crores with the government already having instructed the Railway Ministry to keep apart Rs 9,000 crores for the Sixth Pay Commission recommendations for its employees.
Buoyed by the robust tax collections, the Finance Ministry is likely to set a target for growth in tax revenues by 18-20 per cent for the next Budget.
The total direct tax collection will be in the region of Rs 3,30,000 crores, which is more than the target of Rs 2,70,109 crores set for the year.
The phenomenal tax haul will ride on the back of hefty direct tax collections resulting from high growth rate.
Reports indicate that the UPA government is mulling a Rs 90,000 crore package in the Budget in its last ditch effort to appease rural India. If this come through then this will be the biggest ever farm loan write-off.
Direct tax collections have grown by as much as 40 per cent and will account for almost 55 per cent of the total tax kitty. The tax collection this fiscal would constitute almost 13 per cent of India's GDP.
Better compliance resulting from lower rates of taxation and the government tightening of the noose around tax evaders by a slew of measures over the years has resulted in improvement of tax revenues.
For instance, quoting PAN and the Annual Information Report has made tax evasion a more difficult affair.
The stock market boom, with the BSE and Nifty touching historic highs, has resulted in the Securities Transaction Tax growing by almost 60 per cent.
Services, which now account for more than 50 per cent of the GDP, have been recording a double digit growth, and have thus added enormously to the buoyancy in tax revenues. It is also regarded as an area from where larger taxes can be garnered in future. Service tax has been growing at around 30 per cent.
UNI GS MP AS1518