I perhaps echo the country’s sentiment in asserting that the finance minister has resorted to mere illusionary changes when a breakthrough revolutionary Budget was necessary, to bring India back to the era of 9% growth. Where one hoped for an impetus to make things happen, the government?s strategy seems to be that of unsubstantiated hope. Hope, unfortunately, is not a strategy.
First, a dramatic improvement in investment climate should have been the priority. Domestic and foreign investors today live in fear, partly due to a volatile policy environment and, partly, due to inordinate delays in project approvals, almost to perpetuity. While one welcomes the move for investment allowance for projects greater than R100 crore, the small entrepreneur has been left in the dark. The UPA has historically relied on short-term-entitlement-led inflationary growth as opposed to long-term-capital-investment-led sustainable growth. NDA, in contrast, spent 5.3% of the GDP on capital and defence expenditure versus 3.9% by UPA-2. Even the current containment of fiscal deficit is largely on account of reduction of capital expenditure by R77,000 crore (~0.77% of FY13 GDP)! While the headline fiscal deficit seems to be under control, the long run ramifications of delaying the much-needed capital investments would be disastrous.
Second, while token schemes have been announced for women and youth, the government has remained silent on several urgent reforms. I would have preferred the same amount being allocated towards police, administrative and judicial reforms to ensure that women in the country genuinely feel safe, rather than set up a quasi rehabilitation scheme. Interestingly, while the minister has spoken about the need for skill development, the R1,000-crore allocation for NSDC announced in last year?s Budget, was silently shot down during the Mid-Year Review. Only time will tell if these initiatives will also be buried.
Third, a relentless focus is necessary for measuring the impact of our burgeoning social sector spends. For instance, the last National Family Health Survey (NFHS) was conducted in 2005-06. No one seems to know the progress we’ve made on hunger, nutrition and mortality rate over the last 7 years! Separately, Pratham?s Annual State of Education Report points to a continued slide in reading abilities of our children ? In 2010, 46% of Class V students could not read Class II books, which has now tragically jumped to 53%! The need is to assess outcomes of each of these schemes and not limit ourselves to auditing accounts alone.
While UPA-1 promptly took credit for good years post NDA?s structural reforms, UPA-2 now blames external factors for our current maladies. Even as the national growth figures are depressing, Gujarat, under Narendra Modi, continues to make unprecedented progress in both agriculture and manufacturing. While Delhi is abuzz with twin deficits ? fiscal and current account ? the real deficits under UPA are that of leadership and vision.