The finance minister has failed to address the serious concerns on the fast deteriorating economic situation in the country under the impact of the global economic crisis. Instead the
finance minister has made tall and misleading claims about the performance of the UPA
government over the past four and a half years. While under the pressure from the Left Parties, the UPA
government had to undertake some steps in the interests of the working people, the UPA
government has neither succeeded in addressing the key issues affecting people like the agrarian crisis, price rise and unemployment nor has it met the crucial promises made in the NCMP like spending 6% of GDP on education, 2-3% of GDP on health or
universalising the PDS. Even the Supreme Court directive on the universalisation of the ICDS has not been implemented by allocating adequate resources.
The Indian economy is currently witnessing a slowdown, with job cuts and unemployment on the rise. The claim of being the second fastest growing economy in the world will not provide any relief to the millions of workers in sectors like textiles and garments, gems and jewellery, leather, construction etc. who are losing their jobs. Farmers of crops like cotton, rubber, coffee etc. are also facing sharp price falls.
The Interim Budget, which is necessarily an account of expenditure and revenues more or less in keeping with the Revised Estimates of Budget 2008-09, has further exposed the inadequate response of the UPA government to the severe impact of the global recession on the Indian economy. Plan expenditure of around Rs. 2.85 lakh crore, which is less than 5% of India’s GDP, amounts to an extremely weak fiscal stimulus. Compared to the fiscal stimulus plans being announced by countries across the world, this is extremely meagre. China’s fiscal stimulus package amounts to 7% of its GDP for two consecutive years. The UPA government has spent only around Rs. 40000 crore as Plan expenditure over and above what was Budgeted last year, which is less than 1% of India’s GDP. In fact Capital Plan Expenditure is to fall by around Rs. 4500 crore in 2009-10 according to the Interim Budget. Cutting Capital Plan Expenditure and relying upon private investment through PPP projects to boost infrastructure investments is an erroneous strategy in the context of a recession.
The alarming Rs. 60,000 crore shortfall of tax revenue collection in 2008-09 is a direct impact of the economic slowdown. The finance minister has tried to dress up the revenue shortfall as a part of the stimulus plan in terms of tax concessions. The reality is that such huge revenue shortfall will adversely affect public expenditure and constrain the spending plans of the next government. This is already clear from the cut in allocations in the Interim Budget from last years’ expenditure (Revised Estimates) on Rural Development, especially the NREGA, as well as Urban Development and Food Subsidy. The Revised Estimates for Plan Expenditure on Agriculture and Social Services also show that the government has failed to spend the amounts that were budgeted in 2008-09.
The claim of overflowing granaries due to record food production made by the Finance Minister sounds vacuous in the light of the steep cut of 73% in the allocation of foodgrains to the States under the APL category. The benefits of the increase in foodgrains production have not been passed on to the people in terms of adequate and cheap foodgrains available through the PDS.
In view of the global economic crisis and economic slowdown, the UPA government could have announced at least its intention of providing relief to the people through massive increase in public investment in agriculture, rural development, social sectors and infrastructure besides steps to protect workers and farmers from lay offs and price crashes. Instead, what gets reflected in the Budget Speech is complacency and insensitivity towards the growing suffering of the masses.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine