MERCIFULLY THERE WERE no interruptions to the 105 minute budget address of Finance Minister P Chidambaram. The budget was realistic in attending to the most imperative need, of fiscal prudence.
With a professional touch
For good reasons the economy is in a dismal state: persistent high inflation, yawning current account deficit, a falling rupee, high fiscal deficit, a depressed market sentiment that has impacted severely on savings and investments, all cumulatively resulting in low economic growth - an estimated 5 per cent for the currentyear, the lowest in years. Prime Minister Dr. Singh, Congress President Sonia Gandhi and Finance Minister P Chidambaram have, therefore, focused on restoring the health of the economy, in Contrast to the reckless option of going for populist measures with eye on elections. This professional approach deserves credit. It is tough to revive growth over the next few months and face the elections on this expectation; a decision not usually taken by politicians battling for a vote back to power.
Former Finance Secretary K P Geethakrishnan used to refer to the leeway available for the finance managers to play with figures. For instance, they do not provide for huge subsidies and payouts, dues on subsidies to oil marketing companies and take this over to the next year. The fiscal deficit figure has always been a subject of financial engineering. The government had also effected massive cuts in expenditure quite a share of which related to welfare; several chief ministers, including the traditionally strident J Jayalalithaa of Tamil Nadu, have been critical of such cuts severely affecting the states. Quite conveniently, in announcing the outlays for the coming year 2013-14, PC has shown handsome growth over the revised estimates!
The Finance Minister has stressed on the imperative for growth. “Growth is a necessary condition and we must unhesitatingly tend this growth as the highest goal,” he said. PC is only too aware of the comfort. During the first three years of the UPA-I government growth averaged in excess of 9 per cent p.a. This helped the government step up massively outlays on infrastructure and on a vast range of welfare measures, which were instrumental in returning the UPA to power in 2009.
Women, youth and poor theme
The government is also sharply focusing on its targets: PC described these as women, youth and the poor. The several proposals outlined by him thus sharply targets these.
The buoyancy anticipated as a result of the higher target for growth of around 6.5 per cent for 2013-14 isexpected to moderate fiscal deficit to 4.8 per cent from current year’s estimated 5.2 per cent. PC pitches for an ambitious revenue growth of 19 per cent. On this, he steps up plan expenditure by 29.4 per cent over the revised estimates for 2012-13. PC again cries over the familiar failing: “I have provided sufficient funds to each Ministry/Department…. Now it is for the ministries and departments to deliver the outcomes through good governance, prudent cash management, close monitoring and timely implementation….” Easier said than done!
The finance minister has stepped up allocation to health (24.3 per cent increase over RE) and education (+17 percent over RE).