This was the tenth and the last Budget of the UPA government. In the span of these 10 budgets,the growth rate has declined from over 8 per cent to 5 per cent,fiscal deficit has increased from a low of 2.5 per cent of the GDP to over 5 per cent,the current account deficit at 5.4 per cent is at an all-time high,inflation is stubborn,interest rates are high and back to the bad old days,investments are down and investor confidence in India and abroad is at its lowest.
The Budget was presented in this background and the least that was expected of the Finance Minister was that in this Budget he would unveil the steps which would revive confidence and create the environment for reclaiming the earlier high growth rate. Unfortunately,the Finance Minister has failed miserably to do so.
Just as the Railway Minister criticised his predecessor minister in his Budget speech,Sri Chidambaram has criticised his predecessor Sri Pranab Mukherjee,who now occupies Rashtrapati Bhavan,when he says in the Budget for 2012-13,the estimate of plan expenditure was too ambitious and the estimate of non-plan expenditure was too conservative. It is the same government and the same Prime Minister,but he merely sits there and listens approvingly.
What an irony? The FM then proceeds to rationalise expenditure and in the process reduces the plan expenditure for the current year by over Rs 92,000 crore,capital expenditure by Rs 37,000 crore and claims to achieve a fiscal deficit of 5.2 per cent,better than the expected 5.3 per cent. It must,however,be noted that it is productive expenditure which has been drastically reduced which explains why the revenue deficit has gone up to 3.9 per cent in the revised estimate this year from 3.4 per cent estimated in the Budget. He has thus paid no attention to the quality of expenditure and reduced productive expenditure at random. There is no doubt that this massive reduction in expenditure will further dampen demand in the economy and definitely create short-term pain for everyone. The government clearly believes in the principle of heads I win and tails you lose.
So,when it raises expenditure by over Rs 2 lakh crore in 2008-09 ostensibly to tackle the global financial crisis it is doing the right thing and when it reduces expenditure by Rs 60,000 crore in 2012-13 even when the global crisis persists,it is still right.
The FM has not dealt with the problem of inflation either on the monetary or on the supply side as was expected and has left the people at Gods mercy.
As far as the current account deficit is concerned,he is hoping that foreign investors will bring money into India automatically and solve the problem for us. Nothing could be more pathetic.
In view of the fact that savings have declined in the last five years from 37 per cent of the GDP to less than 30 per cent,the Finance Minister should have taken more determined steps to encourage savings by giving concrete concessions in income-tax to the savers. He has failed to do so. The only silver lining is the additional Rs 1 lakh concession that he has given for housing on the income-tax side.
Infrastructure has received mere lip service. The problem in infrastructure is of clearances and other administrative bottlenecks,not finance. He has kept quiet about the removal of bottlenecks. So,all infrastructure sectors like National Highways Development Programme,telecom,ports and roads will continue to languish and so will critical sectors like power and civil aviation.
The defence allocation has been reduced drastically from budgeted estimate to revised estimate this year and the allocation for next year does not even take care of the rate of inflation.
The Food Security Bill allocation of Rs 10,000 crore is a mere pittance. Everyone knows that the annual outgo will be in excess of Rs 1 lakh crore. Going by the cuts which have been imposed in this years Budget,the next years allocations have no sanctity and there is therefore hardly any point in discussing them.
The UPA government is solely responsible for the crises of the Indian economy. We had expected that the Finance Minister would come out with a bold Budget which will inspire confidence in the Indian economy. Unfortunately,the Budget is a status quoist,business as usual Budget and fails to inspire any confidence. Verbiage is not a substitute for content. The economy will continue to languish and the people of India are in for a great deal of suffering in the days to come.