Finance Minister Pranab Mukherjee missed out on an opportunity to provide a further boost to India’s worsening economy by choosing to present an ordinary interim budget — despite admitting that extraordinary measures were needed for the current extraordinary times.
With general elections in April-May,Rs 850 crore has been set aside for poll expenses. With all political parties set to hit the campaign trail sooner than later,Mukherjee sounded his own party’s poll bugle,saying “the people will recognise the hand that made it all possible”.
In an otherwise lukewarm presentation,Mukherjee held out some tips for the next government. To counter the slowdown,he said,the regular budget must consider tax-rate cuts,and be ready to spend an extra 1% of GDP — Rs 33,500 crore — in the next fiscal. Never mind the fiscal deficit that is already estimated at 5.5% of GDP in 2009-10.
The government expects the economy to slow down to 5% in 2009-10 compared with estimated growth rate of 7.1% in the current fiscal. It has estimated a GDP growth rate of 10.97% next fiscal. But with average annual inflation expected to be 5-6%,the real GDP growth rate in 2009-10 is likely to be between 5% and 6%.
In the aftermath of the Mumbai attacks,Mukherjee has,unsurprisingly,hiked defence spend by 24 per cent to Rs 1,41,703 crore. The defence spend for the next fiscal thus accounts for almost 14.86% of the total expenditure (compared with 12.71% in 2008-09 and 12.86% in 2007-08).
The subsidies budget has been slashed by 22% to Rs 1,00,932 crore for the next fiscal,largely because of a cut in global crude oil prices,which in turn will require the government to fork out less money as concession on sale of decontrolled fertilizer to farmers. Mukherjee also expects to realize Rs 1,120 crore from disinvestment.
The allocation towards the government’s flagship schemes including the Jawaharlal Nehru Urban Renewal Mission and Rajiv Gandhi Rural Water Drinking Programme have,expectedly jumped to Rs 1,31,317 crore.