Budget 2001: A Primer

In this context, it may be interesting to take a look at the budgetspresented during the past four years.

A common feature of these budgets is their supposed emphasis on the `KeyObjectives' which are indisputable. These are: strengthening the ruraleconomy and agriculture, human resource development, enabling the poor/weaksections of society, developing infrastructure, increasing the pace ofeconomic growth, and bringing in fiscal discipline. While the objectives bythemselves are admirable, the achievements have fallen short. For example,the fiscal deficit in 1997-98 worsened to 6.1 per cent of GDP; the overalleconomic growth slowed down to 5 per cent; agricultural growth was negativeand industrial production slackened.

The Budget for 1999-2000 proposed to eliminate revenue deficit in four yearsand fiscal deficit to a figure below 2 per cent of GDP in the same number ofyears. Very laudable objectives and a very bold statement of purpose. All inthe domain of intent, of course. Because, the very next year, i.e. whilepresenting the Budget for 2000-2001, the same finance minister, YashwantSinha, expressed his concern over managing the fiscal deficit. He admittedof a huge public debt and an ever-growing bill of interest payments. Ofcourse, he blamed it all on the "long history of fiscal deficits and alegacy of huge public debt". There was also the super- cyclone in Orissa asanother reason to put the blame on.

Where will the resources for bridging the deficit come from? Since the lastfive years, whether the government at the Centre was that of the UnitedFront or of the National Democratic Alliance, a `solution' has been found:that of `disinvestment' in the public sector units (PSUs). This is similarto selling silverware at home. But, even here, there is much confusion. SomePSUs such as IOC, ONGC and VSNL have been classified as Navaratnas (Gems)and are to be helped. Some other PSUs that have not done well like BharatYantra Nigam, HEC, Hindustan Paper Corporation etc., are to be restructuredand revived.

Obviously, the badly performing units cannot be disinvested; so, again, thegovernment puts good money in these ventures. Ironically, during 1997-98,IOC and VSNL were declared to be `Navaratnas' and the next year, during1998-99 Budget, Mr Sinha proposed to disinvest specified portions of equityof these PSUs. In short, what the minister proposes in the Budget is notquite achievable. Then, what is the point in making a big issue about theBudget presentation?

The allocation of resources have always been piecemeal and incrementalbetraying the commitment of the government towards the professed goals. Inthe 1998-99 Budget, the finance minister declared the ambitious target of"providing drinking water to rural habitations in the next five years".However, his allocations for the Accelerated Rural Water Supply Programme inthe 1998-99 Budget were only incrementally enhanced to Rs 1,627 crore asagainst Rs 1,302 crore during the previous year.As we all know, the availability of drinking water is still a major problem.

The problems of clean groundwater or surface water have, in fact, increasedover the past years. Moreover, droughts of the severe kind coupled withfloods have been recurring with enhanced intensity. The point is: Budgets,over the years, have been at best an enumeration of the government's intent.

But, if the intent is not backed by any tangible action and adequateresource allocation, the Budget presentations will continue to remain in theworld of shairi or poetry, as indeed our finance ministers have beenexhibiting a demonstrated flair for.

Take Mr Sinha's 1998-99 Budget declaration: "We are committed to raising thetotal resource allocation for education to 6 per cent of GDP in a phasedmanner". And then, he goes on to allocate Rs 7,047 crore for education. Evenif this entire amount was indeed available during 1998-99, it would be a farcry from the target of 6 per cent of GDP. In fact, Rs 7,047 crore works outto only a small 0.44 per cent. With this kind of incrementalism, would theyear 2000-2001 Budget's objective of `universal elementary education by2003' be achieved? Why speak of reaching the moon when barely keeping afloatis a problem. To what extent are these Budget presentations an exercise topull wool over the eyes of the citizens of this country? Of course, to befair to Mr Sinha, in the Budget for 2000-2001, in Section 18 (Part A) helaments that: "Even after 52 years of independence ...1.8 lakh villages donot have a primary school within 1 km; 4.5 lakh villages have drinking waterproblems." But, when one is in government, laments do not substitute forreal action. A Budget is a plan for action. If this plan cannot be worked,there is no point in wasting the time of hundreds of millions of ourcitizens on the televised presentation of the Budget.

The Budget proposals for taxation have also been interesting. In the Budgetof 2000-2001, Mr Sinha says (in Section 76, Part B): "I am including roastedchicory in the list of exempted items as coffee itself is free from exciseduty". This may either be a case of too much detail or a case of triviafinding their place in a national administrative event.

In last year's Budget, the 8 per cent excise rate became 16 per cent formost items. "However, certain items, essentially covering medicare and itemsof use by the common man, are being exempted from the excise duty" - itemsas specific as medical and surgical gloves, potassium iodate, medicinalgrade hydrogen peroxide, tooth powder and soaps for distribution through PDS.Thus, the common features of our Union Budgets are that: l they are full ofpiecemeal action plans and hence appear to lack focus;