Everyday Economics: Economic stability over populism

Finance Minister Nirmala Sitharaman left all existing direct and indirect tax rates untouched in the interim budget. Technically, interim budgets merely highlight the expenditure needed to keep the government functioning until a full budget can be presented. Before its term ends, the Lok Sabha votes to approve the expenditure. But most governments flout this convention. In the 2014 interim budget, the then Finance Minister P Chidambaram announced the One Rank One Pension (OROP) for the armed forces, making a token outlay of Rs 1,000 crore. Today, the burden of pensions on the defence budget has left insufficient money for investments. How Sitharaman's predecessors fared In 2019, Sitharaman's predecessor, Piyush Goyal, announced annual cash payments of Rs 6,000 per farmer family under a new flagship PM-Kisan scheme. He also made annual incomes of up to Rs 5 lakh tax-free, raising the income tax threshold to roughly three times the per capita income. In one stroke, he let go of 1.3 crore taxpayers; 63 per cent of the individuals who filed returns that year paid no income tax. Hardly any country in the world is so generous about the minimum threshold for tax-applicable incomes. Goyal's 2019 interim budget attempted to change the country's political mood after

This article was originally published on March 01, 2024.