Saturday, 25 January 2020

A Bland Budget

Updated: March 19, 2011 2:29 pm

The Union Budget-2011-12 will further make a deep hole in the pocket of the aam aadmi. Although Finance Minister Pranab Mukherjee has announced new initiatives to increase the supply of specific food items such as edible oil, vegetables, and pulses, the introduction of one per cent excise duty on about 100 items—mainly essential commodities—will only trigger inflation and price rise. At a time when the aam aadmi is reeling under the impact of price rise, the budget ought to have addressed his bread and butter issues. Although Pranab Mukherjee said in the budget speech that the three imperatives for him are double-digit growth, inclusive development and better public distribution system, the budget lacks the bite, especially for aam aadmi. Several positives were pointed out by the economic survey, but the budget failed to capitalise on these advantages. The budget has endeavoured to calibrate various incentives and tax provisions, but this calibration will marginally influence the economic growth. With inflation hovering at 9.3 per cent, uncontrolled rise in prices of food and other necessary commodities, it is unfortunate that there is not a single effective measure to keep inflation under control. On the face of it, the marginal increase in tax exemption will have minimal impact on the pocket of the average tax payer. Higher income tax relief to those above 80 years of age is a joke because there is little likelihood of many beneficiaries in this category. They would either have no earnings at all or would be affluent enough not to bother about paying tax. The budget has done a great disservice to the middle income group by bringing the diagnostic service under the tax net. What is more there is a relief of Rs 1500 crore in direct taxes, a subsidy to the rich, whereas there is a mobilisation of Rs 1300 crore through indirect taxes, a burden on the consumers. The concept of cash subsidy for kerosene appears a myth, given the level of corruption in the administration. The budget failed to go beyond the non-monetary aspects of development and does not recognise the importance of sound policy governance and institutions in promoting development. Merely programmes are not sufficient for development. Sound policy governance and institutions are also critical. Last year there was so much uproar in tribal areas with respect to large industrial projects. Where is the rehabilitation policy? There is so much leakage in PDS, NREGS, ICDS and other schemes. How is the government going to measure that and plug that? The budget maintains a studied silence on all these issues.

                Further, the budget has nothing in it to be hailed as reformist as it has failed to fulfil the expectations of the people. It has set aside a significant portion of the total outlay for education. But consider the tasks facing our education system before buying the argument that the allocation for education is set to receive a boost. According to estimates, a considerable number of children do not even step into schools, and a huge majority of the existing schools are in a dilapidated condition without toilets, drinking water and sufficient teachers. Now, with an apparent increase of allocation, with the current state of rising inflation and when the government is vigorously promoting the all-out privatisation and commercialisation of education, will the budget really give a boost to education? Furthermore, overall social sector spending at Rs 1,60,887 crore will be 17 per cent more than last year but the big idea of food security that was announced in the last budget is still to be operationalised with differences having cropped up between the National Advisory Council and the government on the target group, extent of coverage, and the estimates of the outlays that will be called for. Yet there is no reference to releasing from central godowns food stocks that are more than double the buffer norm. Neither is there any effort to roll back the last budget’s hikes in petroleum duties, nor any reference prohibiting huge speculative trading in the commodity exchanges. On the contrary, the burden on the people will increase as major subsidies on fuel, fertiliser and food have been cut by over Rs 20,000 crore, compared to the 2010-11 revised estimates. The absence of any concrete measures to ensure the long awaited food security for all is a big blow to our march towards inclusive growth. And finally, the negligible increase in allocations to health is unlikely to move India towards much-needed long-due access to comprehensive quality primary healthcare for all. In fact the budget lacks a vision, as the government is not surfeited in its approach towards inflation, failed to provide impetus to job creation and infrastructure development and is cruel in that the budget has raised cost of healthcare. Overall, it is not a budget that is calculated to capture the imagination of the country even as it has sought to maintain the growth momentum through minor tinkering.

Deepak Kumar Rath

Deepak Kumar Rath

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