Tax waivers will help big, medium industries, not informal economy: Debapriya
He says that tax exemptions would serve big entrepreneurs, but not the 80% people who are part of the informal economy
The tax exemptions offered in the proposed budget will serve big and medium industries that cater to the domestic market only – not the informal economy, says Dr Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue.
"The 80% of people who work in the informal economy, including street vendors and transport workers, will not get this facility," he told DBC News on Thursday night.
"There is no estimate of the extent of employment in the budget. There is no youth employment estimate either. Only youth employment training has been mentioned, but not employment," he explained.
Various tax exemptions have been offered that will benefit the medium and domestic market-oriented industries in many ways. "I am in favour of this. Although there may be some controversy over mobile banking taxes, I think it is a relatively minor issue," he told DBC.
"We have repeatedly said we need to move away from growth and move towards employment-oriented development. If tax exemptions could have been linked to employment, tax collection would have matched that," he said.
Debapriya said his experience was that the distressed people had suffered a lot due to the pandemic but their suffering was different from those receiving monthly wages.
"The question is whether these people will have employment opportunities. We fear that will not be the case. Maybe this will help the ambitious groups but not those working hard in the informal economy. Besides, I do not know if it will benefit small business owners who are unable to run their enterprises," Dr Debapriya said.
Some will be benefited but not everyone, he added.
He further said the budget had not discussed in detail the consequences of the ongoing second wave of the Covid-19 pandemic in the country. "It has no indication of the third wave, which I assume will hit us.
"The budget was prepared based on the assumption that the pandemic would end in two or three months and life would return to normalcy. I do not accept this. This is what we saw last year," he said.
"Second, even if we do not have health risks because of the crisis, we will have economic risks for a long time. The poverty and employment situations will linger for two to three years. It would have been better if there was a medium-term projection for two-three years in the budget," he added.
Debapriya also pointed out that there are discrepancies in various information in the budget when compared with other main documents.
"We have three main documents now. One is the budget speech, another is the mid-term socio-economic forecast (from 2021 to 2024), and the other is the 8th Five-Year Plan. There are lots of inconsistencies among these documents," he said.
For instance, the 8th Five-Year Plan says poverty will gradually reduce to 17%, but the budget speech says it will be 14%. Similarly, as for the extreme poor, different numbers that are higher than those mentioned in the 8th Five-Year Plan have been used in the budget speech, he said.
"But we know how the poverty situation worsened during the pandemic. I think there has been a problem in evaluating the pandemic situation somewhere. A deep realisation of the crisis was not reflected in the budget."
There are, of course, some positive sides as well, said Debapriya.