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/

A MORE ‘IN-BETWEEN-THE-LINES’ RAILWAY BUDGET – THE WAY TO A POPULIST UNION BUDGET?

A more ‘in-between-the-lines’ rail budget only supports the notion that the Congress party is preparing for an early Lok Sabha election. Except politics of claims and counterclaims, there was nothing new in the maiden Railway Budget speech of Pawan Kumar Bansal.

After the recent hike in the passenger fares in January, no one was expecting yet another hike in the Lok Sabha election year.

But the government coffers, more than the ill-health of the Indian Railways, was on the radar of the makers of the Railway Budget 2013-14.

The UPA government needs billions in funds to fund its populist schemes to encash them in the upcoming general elections, which by the analysis of the political developments of the moment, are going to be held later this year.

(WHY, MORE THAN ANY OTHER PARTY, THE CONGRESS PARTY WOULD GO FOR A 2013 LOK SABHA ELECTION?)

http://severallyalone.blogspot.in/2013/02/why-more-than-any-other-party-congress.html

Indian Railways’ ill-financial health has been a matter of concern for sometime now and the sudden fare-hike in January was a well thought measure to address, at least, some elements of the financial decline.

The timing served two purposes in one go – financial and political. It gave the Indian Railways the much needed cushion of increased cash flows. It also saved the government from the protests of the political opposition if the hike was announced at the floor of the Parliament during the presentation of the Budget.

It also relieved the government as the increased cash flows would reduce the burden on the Union Budget 2013-14 that an ailing Indian Railways might have posed so that the government could spend more on its populist dole-outs.

But, mere increasing the passenger fares was not enough to address the issue. Indian Railways needs much more to improve and modernize its network and infrastructure. The whole world, and the obvious comparison with China’s large network of high-speed trains, is putting India in poor light.

But, when the primary concern was of survival, who was going to think of modernizing and competing at the level of most modern technological innovations in the rail transportation?

The need of survival asked for increased revenue or increased funding by the government. Now a government, hard-pressed for funds, and all out to collect funds to fund its populist measures in an election year, could not have afforded much.

The other way was increasing the sources of income. The only immediate option available was hiking the fares. But the present administrators of the Indian Railways with the outfit being the lifeline of the country directly affecting the life of almost every Indian, too, were not in a position to do so in an election year. That would sound too unpopulist. Isn’t it?

So, in order to sound populist and people-friendly, as well as to increase the options of revenue generation, the UPA government decided to take the back door.

Hiking passenger fares is a sensitive issue as it directly affects the consumers and may invite negative sentiments from the lower income groups – a gamble not to be taken in an election year.

The Indian politicians believe perceptions play a major role in the electoral battles. But, what if it is a do-or-die situation for the Indian Railways?

So, squeeze him (the common man/the voter) out indirectly. Let him be in the perception that the fares were not hiked again. As for the other price hikes, the UPA government believes (wrongly) that it would be able to sail over the troubled waters by launching its populist schemes.

By the time, the voter would come to realize these back-door games, the elections would already be over.

The Railway Budget has increased the ticket prices indirectly by increasing rates like reservation charges, Tatkal charges and fuel surcharges. As expected, the ‘sleeper class’ has been given the least hike, but the consumer here too, has been duped by the other indirect tariff hikes.

The real killer is the proposal to hike the freight charges as well as its linking with the fuel and energy price variations. So, be ready to pay more each time the diesel or power prices are raised.

Indian Railways, though has a relatively low share of freight, i.e., 20 per cent, around 32 per cent of the Kerosene, diesel and LPG is transported through the Railways.

As the fuel prices are now deregulated and market controlled, expect more of regular periodic hikes in prices of fuels and so of the dependent commodities, from foodgrains to consumer durables.

Periodic hike in the fuel prices would increase freight charges increasing prices of the commodities being transported through the Indian Railways. The increased rail freight rates would, in turn, further increase the fuel prices. That would, indeed, be a vicious circle for Manmohan’s ‘aam aadmi’.

But that is indirect and Mr. Bansal has followed one of his predecessors Lalu Yadav, who did many such back-door things, like Tatkal pricing or break-journey rules, to increase revenue figures, that ultimately, squeezed out the common passenger.

What Mr. Bansal has done goes one step ahead. He has not only squeezed the common passenger but has also pressed hard the common man, by introducing the measures that would not only increase the ticket prices, but would also cause price increases across the spectrum of commodities linked with fuel prices and rail transportation.

So, the Indian Railways would be able to manage better and the UPA government will have greater space to manipulate the resources towards the schemes like the direct transfer of cash subsidy or food security or farm debt waiver.

And don’t think much about many loud-mouth claims of new projects, new trains and new concepts – they are just written and spoken to be forgotten. There is no set deadline and timeline for their implementation. In fact, they are just used to decorate the dull and routine fallacies like this Railway Budget.

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