Does the verbosity of the budget that fatigued the finance ministser, symbolise the overall fatigue of the economy? What the 18,971-word strong budget speech finally left was a combination of vague hopes and confirmed economic stress.
When finance minister Nirmala Sitharaman went about the budgetary exercise with the worst growth rate figures of the last 17 years in absolute terms, even she would not have expected anything more than this. The act of declaring concessions in individual income tax rates, conditional on forgoing deductions is not only being smart, but also aims at simplification in tax computation through this switch to the total elimination of deductions. That may be the only straightforward element in the budget.
The minister has talked about building five new smart cities. As early as in July 2014, the prime minister had declared a hundred smart cities, but so far there has been no action on that. Now do we have to understand that it has been reduced by 20 per cent of that? This budget, coming after six consecutive quarters with a fall in GDP growth rate, does not contain any proposals either to stimulate the economy or to increase the income of the people. Instead, it aims to tighten its hold on the sinking income of the people by bringing non-residents into the tax net, selling off public sector units one after another and plugging the deficienes with a set of promises.
The allocation for agricultural sector of Rs 2.83 lac crore, is below the 2.9 lak crore of last year. The amount for Pradhan Mantri Kisan Yojana remains the same as last year - at Rs 75,000 Cr (out of which the actual expense of last year was only Rs 54,000 Cr). When it had been declared that outlay for infra-structure development for five years would be Rs 103 lac Cr, the annual budget shows a mere Rs 1.7 lac Cr. The finance minsiter, who at least this time chose to keep mum about the gains of demonetisation, maintained the same silence regarding the employment sector, and that should be out of compulsion. However, she is loquacious about GST, at the same time without explaining the non-paymentn of states' share of GST revenue or about further reduction of the states' entitlements.
Even as there is nothing for the ruling side to extol, there is also the bigger question how far this very step of the budget is relevant. In the first place, budget figures now have less to do with the reality, than its being handy for propaganda. Last year, the finance minister had relied on two different methods to assess the scale of economic growth. Apart from the confusion caused by this, the excessive ambition in the budget in effect also got overturned.
The total deficit anticipated for the full year was already crossed in the middle of the year. After the budget had been passed last year,changes were declared which would make the budget numbers irrelevant. Corporate tax got reduced on nearly weekly basis; and there were further expenditure liabilities for corporate rescue packages. Thus, in the months following the budget, the finance minister undertook expenditure amounting to 4 times that in the budget of Rs 28 lac Crore. That being so, why should there be a budget? Why should there be a parliament? Another key element getting lost is the democratic character of the very exercise. Even if it technically wins the endorsement of parliament, budgets get further distanced from the hopes and aspirations of the people.
In the preparation of the budget that affects 130 crore people, popular interests find no place. In the pre-budget discussions, there is no room for farmers or the poor people; only corporates do. When food subsidies get reduced from Rs 1.84 lac Cr to 1.08 lac Cr, it is only the hungry who feel the pinch. When social unrest increases, investments will go down. With government policies themselves sharpening unrest, budgetary figures will become meaningless. This budget totally ignores the poor, the jobless, non-residents and the states. At the same time, the parliament and the budget passed by it are rendered irrelevant in a manner that it deprives itself of any sanctity.