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Monday, July 23, 2018

‘Welcome to the real world’

Government will maintain its majority holding in public sector banks even while raising new capital for the banks.

Updated: July 11, 2014 12:56:40 am

At the outset, I wish to compliment the finance minister for shunning the election rhetoric about the economy as well as the uninformed diatribe of some of his colleagues in the run up to Budget day. Welcome to the real world.

I am glad that Arun Jaitley has acknowledged the basic validity of the numbers presented in the Interim Budget for 2014-15 and has stuck to them — fiscal deficit of 4.1 per cent and revenue deficit of 2.9 per cent (marginally lower than 3.0 per cent). He has also maintained the tax revenue estimates for Corporation Tax, Customs and Service Tax. He has ‘sacrificed’ about Rs 22,000 crore of Income Tax and ‘claimed’ about Rs 7,000 crore of additional excise duties. Of course, they were ambitious targets, but the aspirations of the people are high and our expenditure requirements are higher. Actually, plan expenditure and non-plan expenditure are higher in the Budget than in the Interim Budget, yet the fiscal deficit remains the same. I wonder what those who castigated the Interim Budget numbers will now say!

The imprint of the UPA government’s policies can be found throughout the Budget speech and in the Budget documents:

* The fiscal correction path has been affirmed and the FD target of 3 per cent in 2016-17 will be  maintained;
* The recalcitrant States (Gujarat and Madhya Pradesh) have fallen in line and GST will be introduced;
* The BJP has found its ‘appetite’ for reform (that was suddenly lost in 2013-14) and the FDI cap in insurance will be raised to 49 per cent;

* Discarding Mr Yashwant Sinha’s views, the Government will maintain its majority holding in public sector banks even while raising new capital for the banks; and

*MGNREGA, the National Livelihood Mission, BRGF, RIDF, RMSA, Industrial Corridors, more AIIMSs, IITs and IIMs, One Rank One Pension, minimum pension of Rs 1000 under EP Scheme, and a host of other programmes launched by the UPA governments will be continued.

I find several new announcements are simply a re-statement of ongoing programmes. ‘Skill India’ is a new name for the National Skill Development Mission. Proposals approved for funding under Nirbhaya Fund have been announced again.
Manufacturing, which is the main pillar of the Industry sector, was not mentioned except in the context of FDI and the taxation proposals. There was no policy statement on the manufacturing  sector. There was no reference to the Food Security Act. These are grave omissions. The minorities got short shrift, only 61 words

What was also missing was humour. And inspirational quotes from Victor Hugo or Tiruvalluvar.

BJP sought a mandate for Congress Mukt Bharath. My friend, Arun Jaitley, would have realised that it is not possible to have even a Congress Mukt Budget. This is the NDA government’s and Mr Jaitley’s first Budget. Whatever its shortcomings, it is appropriate to wish them well.

 The writer is former finance minister

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