2014 Budget A Peep Into Achhe Din
A common man, like millions and millions of India, and a non-conformist, my views on the Budget can hardly be expressed in hard economic lingo nor can be claimed as authoritative as of an economist’s.
But my views would not be affected by political leanings or biases that the leading economists and commentators divided in different political camps and ideologies suffer from, albeit without realising it.
So here is my take on the Modi-impacted Jaitley Budget, interspersed with observations of a few well-known economists. Just six weeks in government Arun Jaitley has, considering the mess inherited from his predecessors and the financial constraints, done all he could to lay foundation for growth and development along with welfare measures for the common men like this writer. It is a budget at once exhilarating and yet sober and pragmatic.
As Hari Jaisingh, former chief editor Tribune said that the Budget is futuristic. Dr Jay Dubashi, the old economist with an acerbic style of writing said this Budget has let us peep into this government’s intent, what it could do in a year or two. Yet measures for the common people’s, middle class’s welfare have been taken—cheaper home loans, cheaper TVs and cheaper small cars, more power and water supply.
Now more money would be left in a common man’s pockets which he could either put in savings—now with higher returns—or go in for purchasing consumer items. The increased purchasing power would lead to more production and more industries.
A slew of measures for job opportunities to skilled and educated young have been announced with an outlay of Rs 10,000 crore. This would also trigger growth. The schemes called Skill India and Digital India would fulfil Modi’s promise to the youth.
Simultaneously, five more IITs and IIMs are to be setup for which Rs 500 crore has been allocated. A few of these are to be located in less developed states like Bihar.
The health, an eternal problem especially among the less advantaged, has also been given a fillip with the announcement that 12 medical colleges, one AIIMS in each state, free drugs and diagnostic services for the poor, launch of a Rural Internet and Technology Mission, have also been announced.
In short, Jaitley has given a hard push for a skilled, digital and healthy India. What more could one expect from a government of six weeks?
The corporate sector too has been provided incentives to kick-start industrial growth. India has now opened the door for multitude of opportunities to global companies—FDI in Defence and Insurance.
While refraining from making any eye-catching announcements or announcing any populist measures, he has thus stuck to laying bases for industrial growth, for power generation increased funds through FDI to invest in infrastructure and taken steps for people to save more, and have money to buy—which in turn would boost industrial output—and thus growth.
And despite financial constraints, he announced several welfare schemes which would take two years or so to have full impact. For Delhi alone he has given Rs 1300 crore to tackle water problem, the power situation and providing greater security to women.
In fact, Jaitley’s Budget would not send the stock market into hysterical cheering as punters seek signs of immediate gain, yet it would be hard for the Congress and the Opposition to criticise it which would feel logical to the people. In that sense it is a politically astute and circumstantially realistic budget.
Ashok Malik also noted, “It’s not a budget which the stock markets will call a ‘dream budget,’ nor is it a budget that Congress can easily criticise,” he said, referring to the opposition Indian National Congress party. “To be fair, bold, structural changes have not usually come in the budget speeches,” Malik said.
He added that by awarding a large number of projects to individual states, the budget would provide the government “political cover to take bolder, reformist decisions in the coming weeks and months”.
Dr Dubashi said Jaitley’s Budget outlines his government’s plan and road map for the economy in the coming two or three years. He said he would take growth back to the seven to eight per cent mark and committed himself to a fiscal deficit of three per cent of GDP in two years. He has put aside money for agriculture and aspects of infrastructure. He has offered incentives and tax holidays for crucial power projects. If he can reach the seven or eight per cent growth, he would have to a large extent negated the impact of scams and corruption during the UPA regime.
An economist said, “He has married the inevitable recapitalisation of banks with a need to sell the disinvestment story to retail investors and common citizens, and offered them equity in public sector banks that require fresh funds.”
“This is a departure from the culture of hand-outs and establishes the Finance Minister’s faith in a stakeholder (or even stockholder) democracy. Without expressly annulling the retrospective tax, he has junked it.”
He further noted: “The fillip to Real Estate Investment Trusts (REITS) and Infrastructure Investment Trusts is an excellent news for the real estate and infrastructure markets. It offers Indians innovative and modern tools of investment. All these are important signals.”
The sober and sobering provisions and providing of a slew of measures for the young and welfare of the people, both middle class and the poor, while taking care of industrial growth and inflow of investment, Jaitley has done extremely well. In six weeks, neither he nor Modi can know what more setbacks await, what risks surface.
In such a scenario the two have done a good job. But for times ahead in this and following year, Jaitley has provided a political cover and capital. This would be of help when Modi goes in for reformist moves, promised by him.
A sort of roadmap has been ‘sketched’ for increasing investment, improving infrastructure and reviving manufacturing.
The Budget, in short, as Dr Dubashi put it, shows the intent and the likely reforms and restructuring for people’s welfare, security, development in all sectors and for building a strong economy.
“I would not be surprised if the government presented a Supplementary Budget in the winter.”
The Budget is within striking distance of ushering in achhe din. But on will have to wait—effects of erratic monsoon and Iraq trouble are bad spectre over economy.
By Vijay Dutt