Bhaago Budget Aaya...

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.

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