Friday, Oct 07, 2022

Across the aisle – Budget 2015: Good, bad & ugly

I am an honorary member of both. I am also the selector who will unhesitatingly axe that which is plain ugly.

union budget 2015, arun jaitley, arun jaitley speech, Finance Minister Arun Jaitley, jaitley Union Budget 2015, Indian Economy, p chidambaram, p chidambaram column, indian express p chidambaram, indian express The credibility of the Indian economy has been re-established.

We may have multiple parties in India but among the “commentariat” (columnists, letter-writers, tweeters, bloggers and abusers) there are only two benches: the Treasury who can see nothing but good and the Opposition who can see nothing but bad.

I am an honorary member of both. I am also the selector who will unhesitatingly axe that which is plain ugly.

I thought I may share with you some excerpts from Part A of the Finance Minister’s Budget speech (what he said and what he left unsaid) and my views thereon:

1. “The credibility of the Indian economy has been re-established”: Our efforts since August 2012 have paid off. Recovery began in 2013-14 (6.9 per cent) and continued in 2014-15 (est 7.4 per cent) thanks to fiscal consolidation, containing the current account deficit and moderating inflation. Good.

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2. “We will move to amend the RBI Act this year, to provide for a Monetary Policy Committee”: At last, one major recommendation of the Financial Sector Legislative Reforms Commission will be implemented. Will there be a representative of the government on the committee? Will the governor have a veto? Not revealed. Nonetheless, Good.

3. “I will complete the journey to a fiscal deficit of 3 per cent in three years rather than the two years envisaged previously”: If, as claimed, the economy is poised to grow at between 8 per cent and 8.5 per cent, and oil and commodity prices are low, there was no justification to set back the target by one year. Bad.

4. “Our commitment to farmers runs deep”: The Rashtriya Krishi Vikas Yojana (RKVY), among other interventions, is credited with pushing agricultural growth to an average rate of 4.06 per cent during 2009-14. Allocation to RKVY has been slashed from Rs 8,449 crore in 2014-15 (RE) to Rs 4,500 crore in 2015-16. Who will fund the gap? Mr Abhijit Sen’s warning has gone unheeded. Bad.


5. “Our government is committed to supporting employment through MGNREGA”: Under assistance for State Plans, the RE for 2014-15 is Rs 32,456 crore and the BE for 2015-16 is Rs 33,700 crore. There are bills for unpaid wages and hence the net amount available next year will be smaller. Besides, wage rates have gone up and hence the average days of employment will come down sharply. Prepare for the slow death of MGNREGA. Bad.

6. “We will bring a comprehensive Bankruptcy Code in fiscal 2015-16”: Good.

7. “I, therefore, propose to create a Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs 20,000 crore, and credit guarantee corpus of Rs 3,000 crore”: The government will find the money and then fund the bank, so be patient. Good (intention only).


8. “The soon-to-be-launched Pradhan Mantri Suraksha Bima Yojana will cover accidental death risk of Rs 2 lakh for a premium of just Rs 12 per year. The third Social Security Scheme that I wish to announce is the Pradhan Mantri Jeevan Jyoti Bima Yojana which covers both natural and accidental death risk of Rs 2 lakh. The premium will be Rs 300 per year”: Don’t make the mistake of assuming these are universal schemes funded by the government. These are standard schemes, depending on voluntary enrolment and annual renewal. It is a promise, it will limp along, and be forgotten after a few years. Neither Good nor Bad.

9. “My government also remains committed to the ongoing welfare schemes for the SCs, STs and women”: The numbers tell the sad tale. BE 2014-15, RE 2014-15 and BE 2015-16 for two major disadvantaged groups are as follows: Scheduled Castes Sub Plan — Rs 50,548, Rs 33,638 and Rs 30,851. Tribal Sub Plan — Rs 32,386, Rs 20,535 and Rs 19,980. The actual expenditure in 2014-15 was slashed by one-third, and the allocations have been further reduced for 2015-16. Factoring inflation, the cuts are brutal. For all MPs with a heart and a conscience, especially for those elected from reserved constituencies, it is a call to arms. Ugly.

10. “I intend to establish a National Investment and Infrastructure Fund (NIIF) and find monies to ensure an annual inflow of Rs 20,000 crore to it”: We already have the India Infrastructure Finance Company Ltd (IIFCL). We also have the National Investment Fund into which go the proceeds of disinvestment. There is no harm in having one more instrument, provided the government finds the money every year. Good (but why?).

11. “Ports in public sector will be encouraged to corporatise and become companies under the Companies Act”: Good.

12. “I hope to garner some additional resources during the year from tax buoyancy. If I am successful, then over and above the budgetary allocation, I will endeavour to enhance allocations to….”: That is a pie in the sky. Let the government ensure that revenues do not fall short of the budget estimates before it dreams of additional resources. Nothing can change the fact that MGNREGA, ICDS and ICPS have been shortchanged. Ugly.


13. “I propose to merge the Forward Markets Commission with SEBI”: Good.

14. “We will soon be launching a National Skills Mission”: There is already a National Skill Development Agency that is in mission mode and spearheading skill development through the 31 Sector Skill Councils. It is duplication, if not duplicity. Ugly.


15. “GIFT in Gujarat was envisaged as International Finance Centre. The first phase of GIFT will soon become a reality”: Wake up Mumbai! Mr Fadnavis may lose his job if he opposes the idea, but can he survive if he supports it? Bad, could become Ugly.

Dear Reader, you can make your own score card.

First published on: 08-03-2015 at 12:00:40 am
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