Budget,
in its literal sense, refers to an economic event. It summarises income and
expenditure in an organized manner and represents the direction of the economy.
Come to India, my nation, and it is much more beyond the laissez faire economics. One
of the queers of Indian Budget lies in the fact that we first prepare the
expenses list and then the income. Irony rules.
February
22, Budget Session of the parliament kicked off with the President of India
addressing a joint house. The president, in his monotonous reading of his
speech, uttered nothing which was not speculated of the government.
Clarifications and justifications on not being able to provide sound economic
ambience by “My Government” in a globally effected economy seemed the
President’s objective.
However,
the President is not the man of the hour instead it is the Finance Minister Mr.
Palaniappan Chidambaram who’ll be placing the cards for India’s future
discourse on February 28, 2013. A shrewd
economist, hardcore technocrat, troubleshooter politician and miraculously an
MP from Sivaganga constituency in Tamil Nadu are attributes clutched in
Chidambaram’s sophistication.
Finance
is Chidambaram’s forte but he wouldn’t be very pleased by the state of domestic
as well as global economy. In a time when the GDP growth rate has hit decadal
low (5.3 from last year’s 6.7) , multitude of economic revamping in sight and
votes at stake Chidambaram is sure to lose calories on chair. The budget
2013-2014 is critically important in wake of the government’s misled past
years. The expectations of a fair budget by all sectors and people at large,
during a time when nothing good (except for some foreign investments in drips
and trickles) is coming FinMin’s way, this budget will test his mettle as no
prior budget did.
Removing
subsidies from Petro-products and removing cap from gas cylinders has raved
news in recent times. Food Inflation and Retail Inflation were recorded at
6.62% and 10.79% respectively (as in January 2013). The Food Subsidy Bill,
perceived as UPA-II’s trump card, will bring in lot of relief to the government
wherein they do not have lot many eye-pleasing schemes to offer, blame limited
revenue for that. Nearly 40 percent of India’s population lives below poverty
line. Providing food to vastly deprived majority is remarkable on government’s
part and so is the direct cash transfer scheme which aims at providing cash
benefits instead of subsidy. The implementation of both schemes will be worth
notice, as both schemes carve out huge amounts of government income which could
have been used otherwise.
The GDP growth is not understood by masses,
but figures do intrigue mediocrity. Sadly, it is not on government’s side, as
it reached 5.3% in closing month of 2012. Reducing the Fiscal deficit is a
herculean task, another point on Budget agenda. Fiscal deficit has increased
from last year’s Rs.26, 199 Crore to Rs. 31,016 Crore this year. Fiscal deficit
is an issue of grave importance, it is pivotal in deciding India’s economy down
the years. Increasing the exemption limit on income tax and limiting interest
rates will control middle-class mood sway.
Indian
economy is in dire need of structural reforms at large level, is a fact well
acknowledged by experts and populists as well. Imports have rose from USD 43
billion last year to USD 45 billion this year, while Exports saw a negligible
growth from USD 25.4 billion in last year to USD 25.6 billion this year. The Forex
reserves have dropped from USD 316 billion to USD 295 billion while the
currency depreciated in its value Rs/USD 49 to 53. The only figures that seem
to bring roar to Chidambaram’s vocal chords is the FDI inflow that has
increased from 3 to 6.4% last fiscal.
With
Goods and Services Tax, Land Acquisition Legislation, Restructuring Electricity
Boards losses and Single Window Clearance for large projects on cards,
Chidambaram might very well be able to please the private sector, but it’s
always easier said than done! The middle class is media-driven, the poor driven
by fate.
The growth of economy would surely be on the government’s prime
agenda as every year a new 10 million youngsters enter the workforce and
providing them with work will be significant as a huge young lot will be out
there to cast its vote for the first time. Not in his dreams can the Finance
Minister sway with such big vote bank.
In the
most abstract terms as I read it this budget, Chidambaram has to please a list of sectors while keeping the fiscal
deficit minimum thereby not letting the Reserve Bank to increase interest rate.
He will talk good on the dais as he presents the budget on Thursday,
February 28 and showcase a vision to revamp a crippling economy standing at
crossroads.
On a better day.
Have Fun!
Take Care! :)
