THE HINDU Editorial Vocabulary- February 2, 2018 - Topic 2

Promise and delivery: on Union Budget 2018

While being liberal in its announcements for rural India, the Budget has been frugal in its giveaways to the middle class and the corporate sector. Expectations of an increase in the basic exemption limit on income tax have been belied; instead, a standard deduction of Rs.40,000 is back for salaried taxpayers. While it is only fair that the salaried pay income tax on their net income (after expenses) as the self-employed do, this deduction (which also replaces transport and medical reimbursements) is too small to establish real parity. 

The clamour for an across-the-board cut in the basic corporate tax rate from 30 to 25% has also been ignored, with the cut limited to mid-size companies (up to Rs.250-crore turnover). Though this will benefit the overwhelming majority of corporate tax filers, how this impacts the competitive edge of India’s largest companies in the global context will be debated. Especially so, since the U.S. recently slashed its corporate tax rate to 21% and European nations average 20%. For the salariat and the corporate sector, the increase in education cess will offset some of the gains from these tax cuts. Senior citizens have benefited, particularly from the tax relief on interest from bank deposits and post office schemes, which has been hiked from Rs.10,000 to Rs.50,000 a year. These interest payouts are also exempt from the vexatious TDS provisions. This relief renders senior citizens far less vulnerable to steadily dwindling interest rates on bank deposits and small savings schemes; it also helps them to continue relying on fixed-income instruments to cover living expenses. This relief may reverse the unhealthy trend of risk-averse savers shifting wholesale from bank deposits to market-linked options such as equity mutual funds, in search of higher returns.

The imposition of 10% long-term capital gains tax on profits from shares and equity mutual funds could dampen market sentiment in the near term, but is unlikely to have any structural impact on domestic equity flows. Equities are favoured by the relatively affluent savers and alternative financial instruments such as bonds and fixed deposits invite far higher tax incidence. Moreover, the bulk of new allocations flowing into Indian equities in the last two years have come from retail investors, most of them saving for the long term. It is unlikely that they will beat a hasty retreat from shares or mutual funds just because of a modest levy. Overall, the Budget has a sense of direction that is difficult to find fault with. If some of the proposals seem half-hearted or are not taken to their logical end, it may be the result of revenue constraints. It is to be hoped that as the revenue base improves and GST collections stabilise, future budgets can put the finishing touches on the welfare proposals.

Vocabulary

Frugal: sparing or economical with regard to money or food.

Example: He led a remarkably frugal existence

Synonyms: thrifty, economical, careful, cautious, prudent, provident

Antonyms: wasteful

Exemption: the process of freeing or state of being free from an obligation or liability imposed on others.

Example: Exemption from prescription charges

Synonyms: immunity, exception, dispensation, indemnity, exclusion

Belied: fail to give a true notion or impression of something.

Example: His lively alert manner belied his years

Synonyms: contradict, be at odds with, call into question

Clamour: a loud and confused noise, especially that of people shouting vehemently.

Example: The questions rose to a clamor

Synonyms: din, racket, rumpus, loud noise, uproar, tumult, shouting

Overwhelm: very great in amount.

Example: He was elected president by an overwhelming majority

Synonyms: very large, enormous, immense, inordinate, massive, huge

Antonyms: admit, advertise, avow, betray, confess, disclose

Provision: the action of providing or supplying something for use.

Example: New contracts for the provision of services

Synonyms: supplying, supply, providing, giving, presentation

Antonyms: accident, adventure, calamity, casualty, chance

Vulnerable: susceptible to physical or emotional attack or harm.

Example: We were in a vulnerable position

Synonyms: helpless, defenseless, powerless, impotent, weak, susceptible

Antonyms: entrenched, defensible, unassailable, invulnerable

Averse: having a strong dislike of or opposition to something.

Example: As a former CIA director, he is not averse to secrecy

Synonyms: opposed to, against, antipathetic to, hostile to, ill-disposed to

Antonyms: inclined

Affluent: having a great deal of money.

Example: The affluent societies of the western world

Synonyms: wealthy, rich, prosperous, well off, moneyed, well-to-do

Antonyms: poor

Constraint: a limitation or restriction.

Example: The availability of water is the main constraint on food production

Synonyms: restriction, limitation, curb, check, restraint, control, damper

Antonyms: abandon, arrogance, assumption, assurance, boldness