A look at the major budgets presented by FMs Pranab Mukherjee, P Chidambaram and Arun Jaitley today.
Finance Minister Arun Jaitley on February 28, 2015 presented the Union Budget, which is Narendra Modi government’s first full fledged budget after the interim budget presented by the FM last year in July. Promoted as ‘Sabka Budget’, various proposals in education, health care, social service sector among others were announced. Making the ‘aam aadmi’ happier, FM Arun Jaitley’s budget would let an individual tax payer to get income tax benefit on Rs 4,44,200 in a year.
Here is a comparision of budget reports from 2012-2015, presented by Finance Ministers Pranab Mukherjee, P Chidambaram and Arun Jaitley‘s latest effort.
The new decade was looked at positively by all, from the common man to the richie rich brigade, especially as it ended on a low after the depredations of the global financial crisis whose deleterious effects are being felt even 7 years down the line. However, right from the start, India’s economy headed downward and stayed there as each year unfolded with the UPA government playing more of a reactive role to big emergencies like spiking inflation and fiscal deficit, and most of the times looking clueless as to how to get the economic growth back above the 7 per cent mark – being part of a coalition ensured it could never pass reforms oriented policies, barring the nuclear deal. Ultimately, its inability to find its way through the economic economic morass cost it the Lok Sabha elections, with the Bharatiya Janata Party (BJP) emerging clear winner setting the stage for a ‘new beginning’ for the country after 10 years of UPA rule.
Here we take a look at the major budgets presented by FMs Pranab Mukherjee, P Chidambaram and Arun Jaitley from 2011-14.
Budget 2014- July
With Bharatiya Janata Party (BJP) drubbing the Congress-led UPA in the Lok Sabha elections and Narendra Modi taking over the reigns of the Government of India as the Prime Minister, the new Finance Minister, Arun Jaitley, spelled out the NDA coalition priorities in the Union Budget on July 10, 2014. He elucidated the road map that would lead to the ‘achche din’ BJP promised in the run-up to the Lok Sabha elections.
Jaitley, in his laden-with-crores-speech, indicated that infrastructure would be his govt’s top priority in terms of spending. Expenditure on roads, both for NHAI and rural ones, have been more than doubled. He announced 5 more IITs, 5 IIMs, 4 AIIMS and 100 smart cities project along with an investment of Rs 500 crore for uninterrupted power supply to rural areas.
He also announced plans to raise the FDI cap in insurance and defence production from 26% to 49%, Rs 500-crore price stabilisation fund to curb fluctuation in commodity prices and to control food inflation and Rs 10,000-crore fund to boost availability of start-up capital in the MSME sector.
In the months thereafter, PM Narendra Modi has issued a number of ordinances from insurance to coal, with which he looked to bypass the Opposition blockade in Parliament, which torpedoed government’s ambitious economic reforms plan there – some of them were on policies which the BJP itself had stopped UPA from pursuing.
Budget 2014- Feb
In this interim budget, Then FM P Chidambaram ensured that the ‘red-line’ of fiscal deficit, 4.8% as he once described, wouldn’t be crossed by restricting the fiscal deficit to 4.6% of GDP. With sharp excise duty cuts for small cars, scooters, motorcycles and commercial vehicles, a formal agreement to ‘one rank, one pension’ for defence personnel and an interest waiver of Rs 2,600 crore for 9 lakh student loans, he managed to keep the middle-class happy.
Though the interim budget couldn’t announce much in terms of new policies (due to upcoming Lok Sabha elections) or direct tax changes, Chidambaram pointed out that the annual lending to minority communities increased to 16 times in the last one decade, from Rs 4,000 crore a decade ago to Rs 66,500 crore in FY13.
While the drop in tax collections was along expected lines, what took everyone by surprise was the complete collapse in disinvestment receipts from the sale of the government’s residual stake in Hindustan Zinc and Balco. For some reason, the budget did not reflect the results of the telecom auctions either.
What was termed as “lacklustre” and “unimaginative” by the Opposition, and tagged as the roadmap for investment by then PM Manmohan Singh, was designed to raise government expenditure. FM P Chidambaram, while declaring economic growth to be the highest goal, proposed 2012-14 budget size at Rs 16.65 lakh crore, 16.3% higher than the revised estimate.
The budget pegged the fiscal deficit at 5.2% for 2012-13 and 4.8% in 2013-14, despite the higher than expected hike in allocations for most flagship schemes. Chidambaram promised to support the Food Security Bill, which was UPA’s chief poll plank in 2014 Lok Sabha elections and announced India’s first women’s bank with an initial capital of Rs 1,000 crore to address the safety concern of women, which had gained momentum throughout the country lately.
Chidambaram, who described high current account deficit as his biggest worry, also promised to spur investments through pricing and regulatory reforms in coal, road and oil & gas sectors, and signalled a shale gas policy.
Short on new investment ideas for India Inc, Pranab Mukherjee’s budget speech in 2012-13 had shockingly, plans to reopen already settled tax cases like that of Vodafone, sending negative signals to global investors about tax laws’ stability in India. Instead of giving clearance for Direct Taxes Code and GST, Mukherjee chose to make retrospective amendments in tax laws that reopened cases dated back to as far as 1962.
The only positive in Pranab Mukherjee’s speech was the government’s intention to reduce fiscal deficit for 2012-13 to 5.1% of GDP from 5.9% in previous year.
Pranab Mukherjee’s 2011 budget speech was high on hopes. While the budget had no pain for the corporate sector, it had promises for food security bill and Bharat Nirman. Mukherjee promised that the food security bill would be introduced in the next fiscal, hiked allocation for rural infrastructure under Bharat Nirman Rs 58,000 crore from Rs 10,000 crore, proposed to boost credit flows to farmers by a full Rs 1 lakh crore to Rs 4.75 lakh crore and kept NREGA allocation static at Rs 40,000 crore. But proposed to do virtually nothing to fight inflation and left it for RBI to tackle it with its tight monetary stance.
While expenditure management was the big story of Budget 2011-12, Mukherjee was short on other reform ideas that will push growth to above 8%, including avoiding a firm date for introduction of Goods and Services Tax.