The Budget presented by the incumbent regime is reflective of the economic mismanagement and overall misrule that have characterised the Congress-led Government's nine-year long reign since 2004
When the Union Budget 2013-14 came up for discussion in the Rajya Sabha on March 18, Union Minister for Finance P Chidambaram was absent. He was in Chennai on some undisclosed business. This amply portrays the kind of respect and regard the Congress has for institutions of governance.
Anyway, the Budget has failed to address the country’s two main concerns — corruption and inflation. Slow growth rate, growing unemployment, agricultural crisis and black money within the country as well as stashed abroad are the other burning issues. Yet, there was not even a single mention of corruption in Mr Chidambaram’s entire Budget speech.
It is also not clear how the Government plans to bridge the fiscal deficit of 4.8 per cent (equal to four lakh crore rupees). There are only two ways — to print new notes or to borrow. The first will increase inflation and the other will lead to insolvency.
There is no continuity in the Government. It has become fashionable for Ministers to criticise their predecessors. Just as the Union Minister for Railways criticised his predecessor in his Budget speech, the Union Finance Minister also criticised his predecessor when he said, “In the Budget for 2012-13, the estimate of plan expenditure was too ambitious and the estimate of non-plan expenditure was too conservative”.
But Mr Chidambaram should have compared his Budget estimates with that of previous year’s Budget estimates. Instead, he compared his Budget estimates with previous year’s revised estimates. That is nothing but deception. Consequently, the credibility of the Budget system is lost.
The Central Plan outlay for 2013-2014 is Rs5,55,322 crore. It was Rs5,21,025 crore for the current year. The increase is a mere Rs34,297 crore — 6.58 per cent — which is lower than the rate of inflation and hence denotes a drop in real terms.
This gloomy situation is of the UPA’s own making. Earlier, the Government had assured us that India would not be affected by the global slowdown and that our fundamentals were strong. Now the Ministers are blaming ‘external factors’. Yet, even in the face of this adverse external environment, 48 countries grew faster than India in 2012 — 27 grew at more than seven per cent and 10 grew more than nine per cent. All that is required is prudent economic management, good governance and a revival of domestic policies.
Exports are declining and imports are rising. Current Account deficit is on account of the huge gap between exports and imports and high interest rates. These have led to low investment, which has brought the country to an almost grinding halt in terms of growth. For the first time, the external debt is more than the foreign exchange reserves.
Morgan Stanley and HSBC downgraded India’s growth rate to six per cent for 2013-2014. Earlier, their estimate was 6.2 per cent. Even a soft-spoken industrialist like Mr Kumar Mangalam Birla complained of the country’s lack of transparency in business policies.
In 2004, when the UPA assumed office, the economy was growing at 8.1 per cent — the fastest in 14 years. In 2012-2013, the rate fell to five per cent — the slowest and the lowest in a decade. In 2004, the UPA’s first Economic Survey said: “The economy appears to be in a resilient mode in terms of growth, inflation and balance of payments, enjoyed the benefits of relatively low inflation with comfortable stocks of food grains, enhanced competition in product markets and an appropriate mix of fiscal and monetary policies”. So who brought the nation’s economy to such a passIJ
Please note that the NDA Government started with a four per cent growth rate and increased it to more than eight per cent. But the incumbent regime has brought it back to almost four per cent. The UPA Government has failed miserably to build on the BJP-led NDA Government’s growth initiatives and destroyed the country’s reputation and credibility. Policy paralysis and corruption scandals have soaked its every policy initiative.
Inflation was targeted to be around 6.5 per cent, but it remained above seven per cent for most part of 2012-2013. The food inflation figure for February 2013 was 10.91 per cent.
This Union Budget offers nothing for home-makers. Prices across the board have skyrocketed — be it electricity, water, gas, diesel, petrol, pulses, wheat or rice. Food and essential commodities have shown higher annual price rise of 11.38 per cent and 9.70 per cent respectively. The Government is sitting on 70 million tonnes of grain when, ironically, the key component of inflation in 2012-2013 is food grains.
People who are reeling under unprecedented inflation expected some relief. But they were offered deregulation of fuel products and another dose of higher prices, taxes and service charges. Prices of petroleum products were increased before and after the Budget; supply of subsidised lPG cylinders has also been capped by the UPA Government. Railway fares were hiked this January — a month before the Budget was presented. Also, fertiliser prices have gone up 14 times. What then is the sanctity of Union BudgetIJ
Then are the many issues of fiscal deficit, revenue deficit, current account deficit and above all trust deficit. The Finance Minister was able to achieve 5.2 per cent fiscal deficit because of the massive cut on spending and deferment of payments on fertiliser and other subsidies. This saved Rs91,838 crore from the budgeted plan expenditure of Rs5,21,025 crore. He also reduced Budget allocations and expenditure by almost 18 per cent, the steepest cut in expenditure yet.
As someone rightly said, the macroeconomic indicators — fiscal deficit, trade deficit and level of inflation — are the equivalent of the economic system’s vital measurements. All of these are higher than normal under the UPA. Current Account deficit has risen to an unacceptable level of 5.4 per cent of the GDP. Fiscal deficit was 2.5 per cent in 2007-2008 and now is at 5.2 per cent. The Government hopes to bring it down to 4.8 per cent next year. Where is the roadmapIJ Because of increase in Current Account deficit and fiscal deficit, the rupee has fallen by more than 20 per cent in the last one year.
In the current financial year, the total subsidy is expected to rise to Rs2.47 lakh crore against the budgetary target of Rs1.79 lakh crore. Much of the increases in outlays will be absorbed by the likely increase in prices, particularly subsidies.
On the one hand, the Government reduces subsidies on fertilisers, food and fuel which will have a direct bearing on the common man and on the other it gives huge relief to the rich. According to one study, revenue foregone in the last five years under Corporate Income Tax, Excise & Customs is Rs31,11,169 crore. Non-performing assets under the corporate category as on December 31, 2012 constitute 53.68 per cent amounting to nearly Rs1,00,000 crore. Total Income Tax arrears as on the same date is Rs4,18,696 crore and the Government is not able to recover this huge sum for reasons best known to them. What happened to the Government’s pro-aam aadmi sloganIJ The policy of this Government seems to be words for the poor and actions for the rich.
(The writer is a Member of Parliament and former national president of the Bharatiya Janata Party)