CDS students catch FM shifting gears

Updated: Mar 1 2006, 06:03am hrs
Its the red tag that makes one curious about JNUs best-known distance-campus, Centre For Development Studies (CDS, Thiruvananthapuram). And heres what the Centres youngest research brigadeNadhanael G V, T K Subrahmanian, Prabhat Kumar, Diana Abraham, William Joe and Alex Philiphad to say about Budget 2006-07 at the fe Roundtable session, moderated by Dr P Mohanan Pillai, Fellow, CDS, Thiruvananthapuram, and anchored by fes M Sarita Varma. Excerpts:

Mohanan Pillai: In the last Budget, the FM had discovered the potential of rural empowerment and extended it to HRD. But, there is no explicit continuity in this direction, implying there would be no matching gains and spin-offs. Besides, there is a paradigm shift from production-orientation to consumption-fixation. Two pointers bear this out: the outright reduction in excise and customs duty for consumable imports and transition from commodity to service taxation. What does it all hold for the industrial sector

T K Subramanian: It is a positive step that sectors like food processing, which has farm linkages, have been incentivised for exports. The gainers like food processing, gems and leather, are mostly in the SSI sector. Strangely though, the finance minister has been silent on SSIs. However, a huge growth potential in the semiconductor industry has suddenly been been realised. This would enable India to consolidate its gains in the software sector, with supportive hardware industry development.

Mohanan Pillai: Whats in it for the service sector

Nadhanael: The promotion of IT and tourism sectorfuture employment-generators is a useful move. Yet, a sustainable alternative strategy for ITeS, the biggest job-churning machine in recent times, is missing. This time, the government has dug deep into the revenue potential of service sector (deepening and widening of tax net). It is a contradiction that this growth propellant sector has not been supported aptly. FM has also skirted the issue of sharing service tax with the states.

Mohanan Pillai: On the social security front, absolute poverty needed more urgent attention.

Prabhat Kumar: It is obvious that UPA Governments priorities lie with the aam admi, if one goes by the 31.5% and 22% hike in funding for education and health sectors, respectively. Chidambaram has also been able to comfort vulnerable sections by increasing old- age pensions and switching to gender-sensitive budgeting. Scholarships for girls will be instrumental in bringing down dropout rate further. Customs duties on drugs to treat AIDS and cancer have been trimmed. Instead of being sated by long-term staggered cures for social issue, the FM could also have allocated resources for short-term poverty alleviation.

Mohanan Pillai: Everybody seems to be excited by the farm-eyed Budget.

William Joe: More resources are needed for the agriculture sector. FMs projected 10% growth rate target is over-optimistic, as this requires more than 4% agricultural growth rate. Agriculture credit package at 2% interest will not help revive the farm sector. The Budget has ignored marginal farmers.

Mohanan Pillai: On the fiscal front, there is cautious optimism. Is this a sustainable mood

Diana Abraham: Chidambaram has been more cautious than optimistic, and rightly so, with regard to fiscal consolidation commitments. The adjustment process is going to be revenue-led rather than expenditure-led. The finance minister will find new revenue streams by taxing services, but he should also look at bringing down non-plan expenditure.

Mohanan Pillai: Does the lack of continuity get reflected in trade front too

Alex Philip: There is a broad policy continuity in external sector. But peak customs duty on non-agricultural products should have been cut to 10% for the benefit of exporters. While the marginal cut in duties in intermediary goods like ferrous alloys, package industry, etc, has been exciting, the trade mechanism of duty reduction in imported plastics remains a mystery. Also, the Budget has not made the right sounds on the FDI front.

Mohanan Pillai: The Budget has failed to take up the issue of states heading for fiscal crisis. No innovative fiscal tool has been designed to mop up the mess of debts and commitments that many states are mired in. Secondly, it puts the nation in a consumption overdrive, while ignoring absolute poverty and urban poverty.