NEW DELHI: Paraphrasing Abraham Lincoln, Finance Minister Nirmala Sitharaman on Sunday described the Union Budget as “by the people, for the people, of the people”. She said Prime Minister Narendra Modi was behind the idea to cut taxes for the middle class but it took time to convince the bureaucrats.
“We have heard the voice of the middle class who had been complaining about their aspirations not being met despite being honest taxpayers,” she said.
With the honest and proud taxpayers wanting the government to do more to limit the impact of factors like inflation, the Prime Minister was quick to task Sitharaman to look at ways to give relief.
While Modi was quick to agree to tax relief, it took a bit of convincing to get on board the officials in the finance ministry and the Central Board of Direct Taxes (CBDT) — who are tasked to ensure revenue collection to meet welfare and other schemes, she said.
Explaining the thought that went behind the big announcement, Sitharaman said the tax cuts were in the works for some time.
One of the ideas was to make the direct tax simpler and easier to comply with. Work on this started in the July 2024 Budget and now a new law is on the anvil, which will simplify the language, reduce the compliance burden and be a bit more user-friendly.
Asked how much persuasion did it take to get the PM on board, Sitharaman said, “No, I think your question should be, how much did it take for me to convince the ministry (and) the board (CBDT).” “So, it is not so much the PM, the PM was very clear that he wants to do something. It is for the ministry to have had the comfort level and then go with the proposal,” she said. “So, the more work that was needed, was needed for convincing the Board that efficiency in collection and honest taxpayers’ voice” needs to be heard.
Sitharaman defended the modest increase in capital spending at Rs 11.21 lakh crore in the next financial year starting April compared to a lowered Rs 10.18 lakh crore in the current fiscal, saying the quality of spending has also to be seen.
“If we are looking at the numbers, because we’ve got used to 16 per cent, 17 per cent increase (in capital spending) every year from 2020, and saying you have not increased it by that number (in the Budget for 2025-26), I would equally want to ask you to please look at the way in which the quality of spending has happened, particularly capital expenditure,” she said.
She was also appreciative of the states which received the 50-year interest-free share of the money which went from the central government’s side as capital expenditure for them.
“They have also shown very great interest in capital expenditure and the quality of expenditure, therefore has been very good. At the same time, last year we touched Rs 11.11 lakh crore and this year building on it, it is about Rs 10.1 lakh crore over the revised estimate (RE) which is far more realistic,” she said.
The spending in the 2024-25 fiscal was lower than the budgeted Rs 11.11 lakh crore as four months were lost when the general elections were being held in the country.
“But during that year, the election year, which we’ve just completed, the capital expenditure did go a bit slow. Otherwise, my RE would have also been closer to the Budget estimate (BE) number again,” she added.