Every Union Finance Minister faces the unenviable task of preparing and presenting a Budget whose proposals, no matter how well-meaning they may be, invariably end up upsetting one or the other section of the people, leave industry demanding for more, and make States looking for heavily-funded Central welfare schemes complain of being neglected. Most important, the Opposition is never impressed by the Government's efforts, no matter how sincere, to bolster the economy. So, it is not surprising that Mr Pranab Mukherjee's second Budget in as many years should have riled so many people who clearly had higher expectations. Yet, in all fairness it must be said that Mr Mukherjee has sought to restrict fiscal deficit to 5.5 per cent of the GDP while basing his proposals on the hope that the national economy will perform better and the global economy will move out of the dumps by the time he re-checks his sums in early-2011. At the same time, he has hedged his bets by planning to mop up nearly Rs 70,000 crore more in revenues by way of higher taxes on goods and services. With expenditure projected to increase by Rs 50,000 crore (it will go up from Rs 10.5 lakh crore to a little over Rs 11 lakh crore), he has ensured that even if there is no spectacular growth and the global economy continues to remain in the doldrums, the Government will have sufficient revenue to fulfil its commitments.
The concessions Mr Mukherjee has offered on personal income tax may appear substantial, but the intended beneficiaries have little or no cause to celebrate. The higher imposts on petroleum products and the so-called 'clean energy' cess on coal are bound to have a cascading effect on the prices of essential commodities and manufactured goods while services will cost more. Add to this the increase in prices of consumer durables and the anticipated gains from income tax relief will get more or less wiped out — in fact, the salaried class is more likely than not to be left with a deficit home budget; those dependent on the unorganised sector will be adversely impacted, too; and, farmers have not necessarily gained, nor have investors or any other segment of the economy. The promised benefits will prove to be illusory. Irrespective of whether or not the Budget makes good economic sense — Mr Mukherjee is far too experienced to falter on details — it does fly in the face of the Congress's claim of working for the benefit of the aam admi. The galloping price of food and the relentless pressure of inflation that has caused the RBI to pump money out of the economy and raise interest rates on loans have made life more than difficult for the middle-classes. The poor have little to celebrate as the increase in funds for NREGA is notional. Corporates are saddled with an unfriendly twist to MAT. If market sentiment is any indication, investors are not overly enthused.
It would, however, be in order to underscore the fact that Mr Mukherjee has allocated more funds for physical and social infrastructure development. He has also done well to increase allocation for defence, with more money earmarked for acquisition of urgently required military hardware. But there's a catch. Allocating funds for building highways and roads means nothing unless they are actually built. The UPA's record on this front has been abysmally poor and there's no reason to believe it will improve in the near future. As for social infrastructure development, the State Governments will have to exert themselves for successful delivery on the ground. Urban poverty alleviation, however, will remain neglected due to inadequate funds. And unless Defence Minister AK Antony undergoes a radical change, military hardware will remain un-purchased. Mr Mukherjee, of course, cannot be blamed for not trying!
