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Sunday, February 5, 2023

Union Budget: High Expectations

Union Budget 2023-24 needs to address the rising inequality in India that has acquired an alarming trend at a time when economic growth of the country is projected to decelerate during the next fiscal. The World Economic Forum in Davos 2023 (January 16-20) is in progress and has also brought global inequality in focus. Oxfam has published the global “Survival of the Richest” report on the opening day, and the India Supplement has brought this alarming India Story.

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Union Budget 2023-24 needs to address the rising inequality in India that has acquired an alarming trend at a time when economic growth of the country is projected to decelerate during the next fiscal. The World Economic Forum in Davos 2023 (January 16-20) is in progress and has also brought global inequality in focus. Oxfam has published the global “Survival of the Richest” report on the opening day, and the India Supplement has brought this alarming India Story. The State of Inequality in India Report released in 2022 by the Economic Advisory Council to the Prime minister had already confirmed this and said that inequalities in health, education, household characteristics and the labour market make the population more vulnerable and trigger a descent into multidimensional poverty. By 2020, the income share of the bottom half of the Indian population was estimated to have fallen to only 13 per cent of the national income and own less than 3 percent of the wealth.

On the other hand, the rich are getting richer. The number of billionaires increased from 102 in 2020 to 166 in 2022 and the combined wealth of India’s 100 richest has touched Rs 54.12 lakh crore. The Wealth of the top 10 richest stands at Rs 27.52 lakh crore – a 32.8 per cent rise from 2021. The top 30 per cent who own more than 90 per cent of the total national wealth, among them, the top 10 per cent own more than 80 per cent. Over the last two years, under the new taxation policy, total tax loss was of Rs 1.84 lakh crore. The Centre had reduced the corporate tax slabs in 2019 from 30 per cent to 22 per cent, with newly incorporated companies paying a lower percentage (15 percent). These tax cuts resulted in corporate tax collections declining by approximately 16 per cent in their first year. The burden of taxation has gradually shifted away from the corporations towards the individual income taxpayer.

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The rising inequality could be corrected through progressive taxation, on which the Budget 2023-24 must include some provisions. Imposing a tax on the wealth of the richest has been advocated by Oxfam for years. The rationale behind this has been that the wealth accumulation by the creamiest layer of the country is massive and taxing it can generate huge revenue, which can then be redirected to the development of social sectors of the country. However, in place of taxing the rich more, the Centre has adopted the policy to tax them less, such as reduction of corporate tax, while since 2020-21, the share of indirect taxes in the state exchequer has risen by 50 per cent. Moreover, under the GST regime, there is a decline in the proportion of corporate taxes in the total revenues of the government, which is likely to increase the inequality in the future. Indirect taxes are impacting the poor the most, since 6 out of 10 Indians live on less than Rs 262.4 per day. Taxes are a major source of revenue for the government that is estimated for 2022-23 at Rs 19.34 crore, which is 88 per cent of the total revenue. The system of indirect taxes is regressive.

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The Hills Timeshttps://www.thehillstimes.in/
The Hills Times, a largely circulated English daily published from Diphu and printed in Guwahati, having vast readership in hills districts of Assam, and neighbouring Nagaland, Meghalaya, Arunachal Pradesh and Manipur.
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