| Published on 07-02-2008 In National |
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| Will UPA's last budget live upto the aam aadmi? |
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Written by
Nilotpal Basu |
Those who are aware of the rudiments of how parliamentary democracy functions in this country would know that the budget for this year – 2008-09 -- is virtually the last full-fledged one of the UPA government in the current tenure. Since the general elections are slated for the first half of 2009, the convention is that the government will only place a vote on account. The only exception to this convention was in 2004 where the self professed champions of "good governance", the BJP-led NDA had placed a full-fledged `interim budget' completely contravening the principle of accountability. But that is another story.
The major political implication – being the last budget – is that it must be explicit in redeeming the commitment of the government as enshrined in the National Common Minimum Programme. To recapitulate, the backdrop of the NCMP, it is necessary to remind ourselves that the 2004 mandate was all about the aam admi and their total rejection of the policy paradigm, which was perversely encapsulated in the `shining India' slogan. The bottom line of the NCMP was, therefore, to make a break with that approach. And of course, the extension of a helping "hand" to the aam admi.
It is this background and the subsequent commitments of NCMP that will be tested in this budget. Additionally, there are lessons to be learnt from the now widely accepted economic downturn and slowdown of the global economy triggered by the very major crisis of the US financial system. No longer can the US economy marked by the massive deficit be financed by the surplus from the other parts of the world. The cut in interest rate is inducing outward dollar flow and it is leading to strengthening of other currencies particularly the Indian rupee. On the one hand it is producing major problems for export-oriented labour-intensive manufacturing SMEs and on the other a complete topsy-turvy in the Indian capital market. The need for disincentivising unregulated dollar flow and its adverse impact on employment in the labour intensive manufacturing sector will be more than ever before.
So, the least that one expects is that the glaring deficits in social sector funding in attaining the goals set in the NCMP will have to be breached. The allocation for education and health have to be stepped up particularly for sarva shiksha abhiyan, mid day meals, National Rural Health Mission, expanding capacities in higher education and universalising the ICDS.
On the question of employment, a beginning has been made in implementing NREGA but allocations have to be stepped up radically – more so, given the fact that all rural districts will have to be covered. While this programme has been, inspite of paucity of allocation, started making its impact, the case for similar initiative for the urban poor becomes increasingly relevant.
The question of social security for employees in the unorganised sector has similarly become a compelling imperative given the findings of the National Commission that 78 per cent of our people or 83 crore earn Rs. 20 or less per day. Resources are needed for implementing the spirit of the commission, which the government till now has shown reluctance to commit.
The agrarian crisis is now an established fact. How can it be denied with the mounting suicides by farmers? There has to be a comprehensive debt write-off for small and marginal farmers and bringing down the interest rate to 4 per cent as suggested by the National Commission on Farmers. The need for stepping up of irrigation and rural electrification also assumes underlined significance in this context. It is also relevant that the progress of programmes, which are part of Bharat Nirman, is not all satisfactory. To conclude the component programmes on time, matching allocation is a must.
Inspite of manageable overall rate of inflation, food prices have been a major concern. Congress leaders from states where elections have taken place recently and are election bound will surely inform the finance minister about the impact of this. 11th Plan has proposed food security mission and Rashtriya Krishi Vikas Yojana. Allocation for translating these by larger allocation for food subsidy is an imperative.
The need for allocation for the upliftment in minority population dense areas particularly in education has become an urgent necessity. Similarly, the issue of land redistribution for dalits and the tribals is a priority, which can go a long way in redeeming the NCMP.
On the question of mobilisation of resources – revenue buoyancy continues. Further bold measures with emphasis on increasing tax-GDP ratio should not be much of a problem. The finance minister himself has informed in the past that tax concessions to corporate taxpayers have been increasing. In some instances, even profits are being exempted -- the SEZ being the most blatant example. This must be drastically slashed. As we have pointed out about market volatility and the consequent impact on exchange rate and employment enhancing the security transaction tax substantially and reintroduction of long-term capital gains tax will be ensuring the twin objective of resource mobilisation and market stabilisation.
Finally, if "inclusive growth" is to be achieved, gross budgetary support will have to go up. Without this, the aam admi will not be convinced of the intentions of the government. The Left has no separate agenda – it merely wants to discharge its role as a sentinel of the interests of the common man.
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