THE UNION BUDGET TO HAVE IMPRINT OF MODI’S POOL OF EXPERTS

The Union Budget tomorrow is going to be the second Budget of the National Democratic Alliance government led by Narendra Modi in nine months.

The first one was presented in July 2014 by the Finance Minister Arun Jaitley after the Modi government was inaugurated in May 2014. Then, the government was just one month into the office, nothing to look back to take steps forward.

Now, nine months into the office, there are developments in retrospect that are needed to be factored in while looking forward. And there will be an intensified level of scrutiny therefore.

In addition to the regular factors affecting the state of the Indian economy, another major element that is going to have its imprint on Budget, is the talent pool of the economists inducted by Narendra Modi in key policymaking functions of his government.

It was already visible in the Rail Budget that focused on consolidating on what is there than to engage in economically insane populism. Sources say the team of experts including the Ministry of Finance Advisor Arvind Subramanian, the NITI Aayog chief Arvind Panagariya and the NITI Aayog member Bibek Debroy and the senior officials of the prime minister’s office played a major role in spreading out the policy concepts on the paper.

They are seen as free market experts believing in the primacy of the market to drive the growth and they are expected to follow the suit with the Union Budget.

We should be ready for a no non-sense Budget that would give enough of talking points, to the proponents, and to the opponents. If there has to be some space for populism, it is expected to be in context of the upcoming Bihar assembly polls later this year and the West Bengal polls in the first half of the next year.

But overall, it is expected to be a balanced Budget intending to kick-start the Modi’s vision of making India a manufacturing hub which can meet its requirements internally and at the same can acts as a hub of the export oriented global financial system.

©/IPR: Santosh Chaubey–https://santoshchaubey.wordpress.com/

CHIDAMBARAM SUCCEEDS IN PRESENTING A POPULIST BUDGET

Now what are its measures to say so?

The slowdown in the Economy and the fiscal credit crisis had not left much space for Chidambaram to maneuver or manipulate. He could not take risk to antagonize the international rating agencies or could not let the Economy slip to a junk status that would ultimately flatten the foreign investment in the country or would kill his name as finance minister.
At the same time, he was not in a position to delay or slow the fund-flow to the populist measures direct cash transfer of Food Security Bill.
So, he tried to maintain a balance between these two concerns. And whatever it does to him or his government’s electoral fortunes when the elections come, he looks to have succeeded at the moment in striking the balance, at the cost of hurting some segments of the population to appease the others.
The Union Budget needed to address the segments of the population that the Congress party felt should be targeted as the vote bank; the segment that has voted for the Congress party; the segment that the Congress party thinks would respond to the ‘youth imagery’ of its prime-minister in waiting, Rahul Gandhi.
The segments are:
  • Youth, women and minorities to name the cross-spectrum groups from different community and caste affiliations
  • The poor – farmers, the traditional Congress party vote-bank from the cross spectrum section
  • The poor – the have-nots from the unorganized sector – this too, again from the cross spectrum section
Some of the most talked about related budgetary proposal targeting these population segments are:
  • The annual farm loan has been revised by 22 per cent to Rs. 7 lakh crore.
  • Planned expenditure on direct cash transfer has been pegged at Rs. 55,223 crore.
  • The Budget has put aside Rs. 10,000 crore for the Food Security Bill over and above the normal provision for food subsidy as Mr. Chidambaram said. It is nothing when we see the Food Security Bill is expected to cost somewhere in the range of 1.8-2 lakh crore.
  • MNREGS has been given Rs. 33,000 crore.
  • Mid-day meal scheme has been given Rs. 13,215 crore.
  • Chidambaram’s Budget has provisioned Rs. 1000 crore for skill development of the youth (70 per cent of the voters in the country are under 35).
  • The Budget proposes to establish an all-women public sector bank and ‘Nirbhaya Fund’ (to honour the Delhi gangrape victim) for women safety.
  • The fund for ministry of minority affairs has been upped by 12 per cent at Rs. 3511 crore.
  • Like the Railway Budget, the Union Budget, too talked of creating significant number of jobs.
So good to ears of the voters – isn’t it? Let’s see how it translated into votes.
Like the Railway Budget, there are many provisions to fleece the every target segment that the Congress party has tried to make happy by the populist measures like the above but that needs a fine in-between the lines reading and time.
That reading and the time is a closed box for the UPA government at the moment. It may bring positives or negatives both. But the ‘Goings’ by the moment indicate more about the negatives.
The Union Budget talks about almost 16 per cent higher than expected expenditure and says the increased expenditure would be funded by increased earnings. Who cares at the moment that it would deter the RBI to take measures to reduce the inflation?
The Union Budget evinced mixed response. There was a divided house on supporting or slamming it – be it the economy experts or the industry honchos or the politicians.
But no one can say what the opinion of the masses is. That will only be visible in the outcome of the assembly elections and the Lok Sabha election.
©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/