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Not much relief

For the salaried class — a significant section of which forms part of India's growing middle class — and the senior citizens, there have been very few specific announcements in the latest budget to cheer about. The budget proposals were framed under the shadow of rising prices and the various measures announced such as reduction in customs duties on articles of mass consumption were intended to signal the government's determination to temper the price rise. This anti-inflationary stance is meant to benefit the salaried class and those with fixed incomes on whom the impact of inflation is particularly severe. Yet expectations that the Finance Minister would specifically address their concerns in a tangible way remain unfulfilled. An across the board increase of Rs.10,000 in exemption limits for all categories is the only tax relief. Assessees with incomes up to Rs.110, 000 need not pay income tax. For women assessees the threshold limit stands increased to Rs.145,000 and for senior citizens to Rs.195,000. Every assessee in the first two categories gets a relief of Rs.1,000 in the tax paid but official claims of putting more money in consumers' pockets are offset substantially by the one per cent additional cess to finance higher education.

The value of individual reliefs or concessions gets considerably enhanced if they are rooted in the Indian reality. Thus the enhanced deduction being allowed for health insurance — a maximum of Rs.15,000 (and for senior citizens Rs.20,000) — though welcome is subject to a few caveats. As of now, there has not been much penetration by the service providers, some of whom have publicly stated that it is unremunerative in its present form. On the other side, there have been complaints from the insured that the coverage is restrictive, that the claims are not settled on time and so on. Senior citizens are particularly vulnerable. Medical insurance even if available might be too expensive for many of them. The Finance Minister's other proposal — to introduce the facility of reverse mortgage on residential property — is again theoretically welcome but is unlikely to make a significant difference to many. Unlike in the West, "unlocking" the value of one's house in old age by mortgaging it to a finance company might go against the grain of the Indian middle-class psyche. It transfers the burden of redeeming the mortgage from parents to children, a prospect neither would cherish. Given that life expectancy has been rising fast, there would be an exponential increase in the numbers of the aged and the retired. Their problems certainly need to be addressed with realism and sensitivity.

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