As finance minister for the first time in the Indira Gandhi government, Pranab da offered exemptions for NRIs to invest in India, including allowing them to buy shares from the secondary market. Pranab da, as finance minister, had earned a lot of accolades for repaying the loans of the International Monetary Fund.
Retrospective tax proposal
Retrospective tax was the biggest highlight of Pranab da’s tenure as finance minister for the second time. In 2012, Pranab Mukherjee, presenting the budget 2012-13, proposed to amend the Income Tax Act 1961 with retrospective tax. This proposal was made so that mergers and acquisitions such as Vodafone can be taxed abroad because such deals include domestic assets. Mukherjee’s proposal was widely criticized, while some tax reforms brought by him earlier were appreciated by economists and analysts. Manmohan Singh and Sonia Gandhi also did not agree with the proposal for retrospective tax.
In his book ‘The coalition years: 1996 to 2012’, Pranab Mukherjee defended the decision to introduce retrospective tax, saying that he had proposed that thinking that direct tax should not be discriminatory between domestic and foreign companies. . But experts and opposition said that this would frighten foreign investors.
2009-10 budget proposal
Pranab Mukherjee proposed in the budget of 2009-10 that the income tax exemption limit for senior citizens be increased by Rs 15000, while for women and others this limit should be increased by Rs 10-10 thousand. Apart from this, no change in corporate tax rate should be made. His proposal was welcomed by analysts. In this budget, Mukherjee abolished the fringe benefit tax and the commodity transaction tax. This decision was also appreciated by experts.
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Architect of Direct Tax Code
Mukherjee is also considered the architect of the Direct Tax Code. However this code was never implemented. In this code, Mukherjee proposed to replace the income tax law so that the income tax base could be increased. He proposed to increase the tax exemption limit and make some changes in the tax slabs. The alternative income tax slabs brought by the Narendra Modi government in the budget 2020 is a step in line with the Direct Tax Code.
When the finance minister left the post
Before the 2012 presidential elections, when Mukherjee resigned from the post of finance minister, the Indian economy was badly shaken. Economic growth was slow, inflation was extremely high, interest rates were high, rupee had broken down, investors’ confidence was staggered and rating agencies downgraded the outlook for India’s sovereign ratings. The rupee had lost 20 per cent against the dollar in a year, due to which the economy was under tremendous pressure on inflation, especially in the case of crude oil imports.
Mukherjee’s tenure as finance minister was not very positive for the Indian economy. But Mukherjee alone was not responsible for it. At that time the whole world was in recovery mode after the Great Recession.
Also a key role
During the tenure of the Manmohan Singh government from 2004 to 2012, Pranab da played an important role in important decisions like Right to Information, Food Security, Unique Identification Authority of India (UIDAI) and the establishment of Metro Rail Project. At the same time, Pranab Mukherjee also ended the practice of the word ‘His Majesty’ for the President as the President of India.