The debut
budget of the BJP government expresses deep commitment to continue the
trajectory of reforms of benefiting foreign and domestic capital by emphasizing
on larger FDI flows and enlarged avenues for PPP projects. Fiscal consolidation
is sought to be effected through contraction of public expenditures and not by
increasing revenues through taxing the rich. Thus it is a recipe for further
enriching the rich and impoverishing the poor.
Given the
backdrop of slow recovery in the global economy the budget was supposed to
reflect initiatives that gear up domestic demand through planned investment on
the one hand and check food inflation to increase purchasing power of the
majority working people. The advanced estimates for the last quarter of 2013-14
released by Central Statistical Organisation reflects a bleak picture of
overall growth rate (at constant 2004-05 prices) of 4.6 % and negative growth
in manufacturing as well as in mining and quarrying and a massive decline in
growth of construction and trade, hotel and restaurant sector. Despite the fact
that there has been considerable decline in the ratio of investment to GDP
since 2010-11 both in the public and private sectors this budget with its
overriding concern to keep fiscal deficit in check and keeping revenue
expenditure to GDP ratio more or less same has failed to address the required
increase in total plan expenditure in real terms. Total of budgetary support
for central plan and central assistance to states and UT declined in real terms
comparing budget estimates. The figures on central assistance for state and UTs
although increased but the states are left with very little authority to decide
on central schemes and that goes against the federal structure of the country.
The budget proposal heavily relies on public private partnership and FDI to
gear up investment which is hardly going to happen going by past experience.
The
budget proposes to reduce direct tax incurring a revenue loss of Rs. 22,200
crores while increases indirect taxes by Rs. 7525 crores which would obviously
have regressive impact on the common people. The revenue generation proposed in
the budget is high on expectations since there is no significant increase in tax
rates and the revised estimates in revenues for the last two years fell short
of the budget estimates which eventually prompted further cut in expenditures.
The government depends on disinvestment tuned to Rs. 43425 crores which is
higher than last year’s budgeted figure but the actual figures last year was
much less than what was estimated.
The
budget proposes drastic cut in central plan outlay in agriculture and allied
sectors, rural development and social services and women and child development.
There is no increase in allocation in MGNREGA, Indira Awas Yojna rather in real
terms it has declined. The total plan allocation also declined in real terms
roughly by 4 %. Moreover the share of SCs and STs in total plan expenditure is
falling short by Rs. 47000 crores and Rs. 14000 crores according to planning
commission guidelines based on proportion of population.
The
budget also proposes a decline in subsidies to petroleum by Rs. 22054 crores
which would impose more burdens on the people and further increase the
inflationary pressure. Moreover the budget has no concrete proposal to check
the double digit food inflation especially when there is a possibility of
mounting pressure on food prices given the projections of bad monsoon.
The
budget also fails to propose measures to increase employment growth through
revamping manufacturing growth. Investments are low and there is no attempt to
raise domestic demand rather the budget essentially relies on incentives to
private investment through investment linked deductions that grossly failed to
raise investment in the earlier years. Moreover the government announces to
raise the cap of foreign investment in insurance, defence and real estate that
the earlier government could not implement because of stiff opposition.
Therefore the budget essentially fails to chart
a trajectory to increase growth and investment, create employment and check
inflation that was needed in the current scenario. It is a budget relying more
on privatisation and foreign investment and short on innovative ideas to
increase revenue. The budget is grossly regressive and anti-people and would
increase the burden on the common people
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