Has Piketty cast a shadow on the budget’s tax proposals?

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₹10 crore. These rates can escalate, just as they do on income earned. This will either curtail ostentatious consumption or increase revenue.

In a similar vein, states can raise stamp duty rates. The rich are known to splurge on automobiles which could stretch to aircraft too. Here too, the GST Council could consider a much higher rate than the present slabs (with 28% as the highest rate) for vehicles priced above, say, ₹50 lakh.

As all these taxes are progressive and would fund redistribution, they’d serve a valid purpose. The redistribution part also deserves a review, probably even drastic rationalization. For this exercise, consider a few data points.

The budget’s outlay for India’s free-food scheme aimed at the needy, which covers 800 million people and was recently extended by five years, is close to ₹2 trillion, which is about ₹2,500 per head. Is there any adverse selection here? Non-needy users? This is pertinent when juxtaposed with employment data. The central bank’s KLEMS data-base shows 643 million people employed in 2023-24.

Given a population of around 1.4 billion, this means that 757 million people were dependent on the employed, a count that includes children, senior citizens and jobless youth. India’s dependency ratio appears low. The free-food scheme dates back to the covid pandemic.

But, interestingly, KLEMS data shows that employment grew 5.1% and 3.1% in 2020-21 and 2021-22, respectively. So the commonly held view that jobs were lost during these years was unfounded. It happened in some sectors, but overall employment increased.