By Mayank Jain:
The day is finally here and the final interim budget for UPA government for this term has been announced by Finance Minister P. Chidambaram. The budget was pretty much up to what we expected from the government and the FM didn’t take any risks that would add to the worries of UPA. Here are few key takeaways from the budget:
1. India’s Current Account Deficit will be contained at 45 billion as against the last years’ total of 88 billion and fiscal deficit will be contained at 4.6% of the GDP, lower than the red line marked by FM at 4.8% in the last budget.
2. Inflation measured by Wholesale Price Index (WPI) and core inflation have come down to 5.05% and 3% from last year’s 7.5% and 4% respectively. Though food inflation is still high, FM is confident that it is a play of market forces rather than a policy shortfall.
3. Agriculture had an impeccable growth during last year and the exports are about to touch USD 45 billion for the current year ending March, 14. The agriculture GDP growth has also risen to 4.6% as compared to 3% when UPA started its second term.
4. Merchandise exports for the year will peg at a growth of 6%, they fell to negative 1.8% towards the end of previous financial year and it is hence, a bigger growth in exports than the world economy is noticing.
5. The government is keen on highlighting the 19 oil and gas books which have been given out for exploration as well as 7 under construction airports. More boost have been given to travel infrastructure. 3,343 kilometres of railway lines and 3,928 kilometres of national highways have been added in the past year and 9 months.
6. Excise Duty has been cut in the most areas. Blood banks are exempted from paying service tax and no changes have been made from the tax laws of the previous budget this year.
7. Budget allocations: Railways have been given 3000 crores to make the total 29000 crore for the current year. Similarly, expenditure on defence is increased to 2, 24,000 crores for the next fiscal year.
8. The long anticipated demand by Defence Services for One Rank One Pension (OROP) has also been accepted by the government. It will be put in implementation in the next financial year itself and a sum of 500 crores to fill the requirement of the first year is proposed to be transferred.
9. Finance minister also pointed out the need to pass key legislations after debate and discussion in parliament. He emphasized on Forwards Contracts (Regulation) Act, Insurance Laws (Amendment) Bill as well as the Securities Laws (Amendment) Bill.
10. Government has also proposed to announce a non-statutory body called Public Debt Management Agency which will work to revive bad loans and restructure financial obligations of the public enterprises and their lenders.
11. The government will provide 12,000 crores to the north eastern states this fiscal year for all around development and the national food security bill is estimated to benefit 67% of the population. A sum of 100 crores has been allocated for community radio stations.
12. The government will also set up a venture fund of 2,000 crore with IFCI as well as proposed to start four mega solar power projects in the next financial year.
13. The FM also estimated the fiscal deficit for next year at 4.1% and revenue deficit at 3.0% against the current years’ figures of 4.6% and 3.3%.
14. Finally, the FM concluded with a quote from Jean Dreze and Amartaya Sen “India was the first non-Western country — and also the first poor country in the world — to commit itself to a resolutely democratic way of governance.”
15. He put to rest the arguments of AAP and BJP’s political ideologies by telling the house that “Democracy acknowledges diversity, respects dissent, encourages debate, and decides through a government of elected representatives. Neither populism nor majoritarianism nor individualism is an alternative way of governance.”
The budget turned out to be a little better than the ones announced previously by the government with focus on the right areas of economic development and infrastructure strengthening than giving out alms for free. Newer allocations to the north eastern states and community radios make much sense for a progressive country like ours. Car, education and home loans are set to go cheaper with reduction in rates and the sharp reductions in excise duties did surprise a lot of us, but it remains to be seen how much of it will survive for more than three months as the elections will put a new government in place.
On the other hand, the budget did lack some strength in terms of more stringent actions towards containing deficits. The current containment has been possible only through deferring subsidies and interest payments to the next fiscal, which is nothing but manipulation that is clearly visible. The FM’s speech was more of an endorsement of UPA’s policies and actions instead of the country’s true state. Only the brighter side comparisons were made with countries which are deeper in trouble. The FM succeeded in showing us the brighter side of India by this budget.
The big question
Is a fairly decent budget without much populism from UPA enough to make us think twice when we go out to vote? How long before they start doling out populist aids to garner votes, again?