The presentation of an interim budget on February 16 meant that the whole nation was waiting to listen to the acting Finance Minister. It also meant that people were looking forward to some reassurance from the government that, regardless of the impending elections, it will not give up its pro-active approach to keep the economy moving forward. This was essential since, for the first time in many years, our economy is on an apparently downward spiral. Unfortunately, the only thing I can recall from the budget speech is the list of wonderful things the UPA government has done over the last five years. This is an irony. For the last five years the government failed to highlight its commendable initiatives on the social sector and on building up rural India. Indeed, rebuilding India, in spite of its obvious appeal, never became a political movement and, hence, its implementation got entangled in non-functioning bureaucratic procedures. This Monday, however, when everyone wanted to know the economic steps the government has planned to weather the raging economic storm, it decides to pat itself on the back for its past well-intentioned, but poorly implemented initiatives.
There were two important aspects in this budget. First, it was an interim budget with elections less than three months away. Second, the economy was slowing down and jobs were being lost everyday. The first demanded that, when it comes to tax-expenditure policies in 2009-10, the current government does nothing to tie the hands of the next government. The second demanded that the government give top priority to getting the derailed economy on track, arrest job losses, find ways of implementing all the projects that had been promised but held up in bureaucratic red tapism and coalitional politics and, reassure the public that the government had the right answers to the questions posed by a contracting global economy.
Doing both was difficult and, unfortunately, the government took the easy way out. It decided to get up on the high horse of Parliamentary propriety and wait for the next government to take the necessary steps. There would have been no problem with this approach if 2008-09 had been like how it was before. Now is not the time to look good and appear saintly. It is the time to dirty one?s hands, to get down on to the street and work with those losing jobs, those that have waited for jobs and others who had never hoped to participate in the new India.
How could this have been achieved? For one, the budget speech needed to give the government?s reading of the current economic situation and its outlook for the next couple of years. Second, it could have talked about how the actions taken so far are going to work in the economy and, by when. Third, it could explain how the actions taken so far are sufficient to arrest any further deterioration in the economic health of the country. Fourth, it could have outlined its desired policies to get the economy back on track. Then, and, only then, could the Minister say that, however, we will desist from trying to implement any of the new policies since this is an interim budget and let this be our suggestion to whoever forms the next government. Instead, the speech went into a laundry list of what the government has done in the last five years!
The speech lacked the confidence of a government that has, indeed, taken some uniquely commendable initiatives (by making them sound like items from a laundry list) and took the listeners? attention away from some of the important points that were made in the budget. For instance, foreign direct investment has almost doubled in a globally bad year, growing by more than 45 per cent in the second half of this year! The government has extended financial assistance, by continuing with the 2 per cent interest subvention till September 30, 2009, to employment oriented sectors like textiles, carpets, leather, gems and jewellery, marine products and small and medium enterprises. It has extended similar assistance to farmers so that they can obtain short term crop loans up to Rs 300,000 at 7 per cent per annum. The speech should have emphasised the increased allocations to the NREGS and other social sector initiatives by the UPA government.
This government will go down in history as one that had committed the maximum resources to pure development?primary health, primary education, village infrastructure, unemployment insurance and social security. This is the ?USP? of the UPA government but some of their leaders seem to be shy of tom-tomming this. They seem to be more worried about how foreign multilateral organisations and financial institutions will view India?s increased fiscal deficit. This at a time when the developed countries are nationalising some of their financial entities; at a time when all these ?market analysts? were caught with their pants down when the financial crisis hit us! This is a strange phenomenon and it is downright depressing.
The author is with the India Development Foundation