The United Progressive Alliance government is committed to its Common Minimum Programme. This programme is not so radical. Yet, its implementation so far and the Budget for 2005-06 do not substantively reflect its perspective.
Commitments to WTO have undoubtedly inhibited governments freedom and options. But even then the policy framework of the Budget could have followed the valuable advice given by the former President of India on the eve of the Republic Day, through his speech, in which he said: "Three-way fast lane of liberalisation, globalisation and privatisation must provide safe pedestrian crossings."
One shudders to think whether any such safe pedestrian crossings have been provided at all.
Neglected sectors: Sectors like agriculture, employment, health and education did not receive adequate allocations in the past. The discontent in these sectors is growing. What is needed is assurance of effective utilisation of the increased allocations in the Budget.
In successive budgets, financial allocations to agriculture as a percentage of GDP have been meagre. Bio-diversity has to be an essential feature of agriculture in India. However, there is a fear that corporatisation will push agriculture towards mono-culture affecting the small and marginal farmers who have always shown better productivity per acre.
In agro-industries like sugar and cotton, unemployment is colossal. The report of the committee on revitalisation of sugar industry headed by SK Tuteja to which there is a reference in the Budget states:
"By April 2004, the sugar industry found itself entangled in a complex web of problems of high stocks, low prices, poor profitability, mounting cane price arrears, financial crunch (or outright sickness), limited modernisation/ expansion/ diversification and weak international competitive edge."
The result is closing down of several sugar factories, unemployment of workers, distress to cane growers and hardships to agricultural workers working on sugarcane farms. Efforts are needed to end this crisis through adequate financial assistance.
For want of adequate resources, social sectors like health and education were suffering. About 81 lakh children are deprived of primary education according to the governments Sarva Shiksha Abhiyan. Let the financial package mentioned in the Budget not result in a gap between outlay and outcome as mentioned by the finance minister in his Budget speech.
Black money: Making corrections for certain infirmities in the estimation of black money in 1995-96, the latest available estimate of black money is found to be 40% of the GDP. No concrete measures are suggested in the Budget to dig out this money to mop up resources for development.The finance ministers proposal to levy tax on withdrawal of cash on a single day of over Rs 10,000 or more from banks at the rate of 0.1% with a view to check generation of black money is not only over-simplistic but most preposterous.
FDI controversy: On the question of Foreign Direct Investment (FDI), there is a sharp controversy. What is of relevance is not only the quantum of investment but also its sensitive aspects. For instance, consider the move that was made to enhance FDI in telecom sector from 49% to 74%. In this sector, more important than the quantum jump in FDI is the security dimension in terms of national interests.
As regards the general policy about disinvestments of PSUs, it is necessary to recall the recommendations of the Rao commission which suggested that where disinvestment takes place, the accruals should not be used to reduce the fiscal deficit but should be spent on social sectors and for strengthening the weaker PSUs, through available mechanism.
High interest payments: In the Budget, interest payments on borrowings are Rs 1,33,945 crore. This is almost 38% of total revenues. To reduce this burden, Article 292 of the Constitution empowering Parliament to limit borrowings should be invoked and alternate internal resources built.
Poverty line and employment: In the scheme for employment guarantee in the rural sector for those below the poverty line, one job per family is assured. The Budget ought to take into consideration the limitations of the scheme. In rural areas, even those who are slightly above the poverty line are in need of employment. In this respect, the scheme needs to be revised.
Decentralised sectors: Decentralised sectors like khadi and village industries, powerloom and handloom, production of organic manure, indigenous generation of rural electricity and schemes to revive dried up rivers in rural areas through innovative local techniques must be adequately financed.
Market and Imports: In the orientation of the Budget, market is made the pivot of the economy.Large imports are a burden on our economy. Total removal of quantitative restrictions on imports and imposition of bound rates that put limitations on import duties have endangered our economy. The subsidised imported goods from developed countries harm our market for indigenous agricultural and industrial products.
In totality, the Budget for 2005-2006 lacks integrated perspective of development from the grass-root level and the machinery to implement it.