Skip to main content

Appeasing the powerful: reduced corporate taxes leading to resource constraints

By Bharat Dogra 

In 2019 the Government of India announced a reduction of corporate tax rate from 30 per cent to 22 per cent, along with a further reduction to 15 per cent for new corporations.
The Parliamentary Committee on Estimates has recently stated that this has led to a revenue loss of Rs. 1.84 lakh crore to the public exchequer in the two years 2019-20 and 2020-21.
This raises the question regarding how much we have lost in terms of funds availability for priority tasks. What we should not forget is that many important schemes and programs have been facing severe resource constraints. Allocations less than needed have been made for important welfare and development programs and then on top of this further cuts have been made, citing resource constraints. Hence questions are bound to be asked regarding the additional funds that could have become available for priority needs if this loss of revenue amounting to Rs. 1.84 lakh crore had not taken place.
Here we present calculations to show that an amount of Rs. 1.84 lakh crore would have been adequate to exactly double the allocations for as many 20 departments and ministries which are very important for welfare and development.
In the table below we show the combined actual expenditure for 2019-20 plus 2020-21 for 20 ministries and departments. By adding these we get a figure of Rs. 1.84 lakh crore. In other words if the loss to revenue caused by corporate tax cut had not taken place then there was a potential of exactly doubling the budget/expenditure of all these 20 departments and ministries.
The expenditure data has been taken from the expenditure profile for these two years provided by the Budget Division of the Ministry of Finance, and then adding the figures for the two years.
Table—Combined Actual Expenditure of 20 Ministries and Departments for 2019-20 plus 2020-21:
1.Ministry of Environment, Forests and Climate Change---Rs. 4486 crore
2. Ministry of Labor and Employment—Rs. 23003 crore
3. Ministry of Minority Affairs—Rs. 8351 crore
4. Department of Social Justice and Empowerment—Rs. 16771 crore
5. Department of Empowerment of Persons with Disabilities—Rs. 1864 crore
6. Ministry of Tribal Affairs—Rs. 12821 crore
7. Ministry of Women and Child Development—Rs. 42395 crore
8. Ministry of Youth Affairs and Sports—Rs. 4384 crore
9. Department of Science and Technology—Rs. 10300 crore
10. Department of Health Research—Rs. 4984 crore
11. Ministry of Ayush—Rs. 3910 crore
12. Department of Pharmaceuticals—Rs. 1009 crore
13. Ministry of Culture—Rs. 4629 crore
14. Ministry of Development of North-Eastern Region—Rs. 4510 crore
15. Department of Animal Husbandry and Dairying—Rs. 5175 crore
16. Department of Water Resources, River Development and Ganga Rejuvenation—Rs. 14650 crore
17. Ministry of Micro, Small and Medium Enterprises—Rs. 12152 crore
18. Ministry of New and Renewable Energy—Rs. 6051 crore
19. Ministry of Panchayati Raj—Rs. 1184 crore
20. Ministry of Planning---Rs. 1316 crore
Total—Rs. 183945 crore (approximately) Rs. 1.84 lakh crore.
As can be easily seen, several very important ministries and departments are covered in the table above, including the Ministry of Women and Child Development, Ministry of Labor and Employment, Ministry of Tribal Affairs, Ministry of Minority Affairs, Department of Social Justice and Empowerment and Department of Science and Technology.
Several schemes and programs of these various ministries and departments have been suffering due to lack of availability of adequate resources and have been in news due to this. Imagine what a relief it would be if the resources available could be doubled, as would have been possible if the loss on account of arbitrary and unwarranted cut of corporate tax was avoided.
Here it may be recalled that this cut in corporate tax, announced in September 2019 just before the Howdy Modi event organized in the USA, had attracted a lot of criticism at that time as well.
The lesson for future is that in situations of severe resource constraints revenue opportunities should not be squandered just to appease some powerful interests. The costs for people can be very heavy, as was soon seen during the pandemic times which followed this tax cut.
---
The writer is Honorary Convener, Campaign to Save Earth Now. His recent books include ‘Planet in Peril', ‘Man over Machine’ and ‘A Day in 2071’

Comments

TRENDING

'Modi govt's assault on dissent': Foreign funds of top finance NGO blocked

By Rajiv Shah  In a surprise move, the Ministry of Home Affairs, Government of India, has cancelled the foreign funding license of the well-known advocacy group, Centre for Financial Accountability (CFA), known for critically examining India's finance and banking sectors from human rights and environmental angle.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

'Wedding of the century': What does Mukesh Ambani want to prove by such extravaganza?

By NS Venkataraman*  Mukesh  Ambani,   a renowned Indian industrialist who is said to be the richest person in India and  one of the richest persons in the world,   has just now conducted the wedding celebration of  his son in Mumbai,   with unheard level of lavishness in India.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

'28% rise in sedition cases': Top global NGO alliance rates India's civil space 'repressed'

By Rajiv Shah Rating India's civic space as repressed , Civicus, a global civil society alliance, in its new report submitted to the UN Human Rights Committee (UNHRC) on the state of civic space in the country has said that the use of sedition law against the Modi government’s critics continues. "Under the government of Prime Minister Narendra Modi, sedition cases have increased by 28 per cent with over 500 cases against more than 7,000 people", it says.

How US is using Tibetans to provoke conflict with China 'ignoring' India

By Lobsang Tenzin*  On July 12, US President Joe Biden signed the Resolve Tibet Act, and Tibetans cheered for it, believing that the law promotes a resolution of the dispute between Tibet and China. Is this true? First, let's look at the issue of the ownership of Tibet. 

Over 3.8 billion animals at risk: India on crossroad in animal welfare practices

By Rupali Soni*  In a collaborative effort, the India Animal Fund and Dasra have unveiled their report , "Our Shared Future | Securing Animal Welfare, Human Wellbeing, and Sustainability in India." This landscape report provides a thorough overview of animal welfare and underscores its indispensable role within India's socio-economic and ecological frameworks. It also illustrates how animal welfare is intricately intertwined with public health, labor welfare, and climate resilience.

Tribals from 60 villages observe seed festival to 'protect' diversity of indigenous seeds

By Bharat Dogra*  Nearly sixty villagers are sitting on an open floor covered by a roof for shade but otherwise open on all sides. Women and men are present in equal numbers but the visibility of women is higher because of their colorful dresses.

Misleading ads 'manipulate, seduce, lure' to market unhealthy harmful food

By Our Representative  The Nutrition Advocacy in Public Interest (NAPI) in its new report “50 Shades of Food Advertising” has sought to expose how seductive, luring, manipulative or deceptive these advertisements can be. Consequences of such advertising are increased intake of unhealthy food products that is associated with obesity and diabetes, it says.