Financial Daily from THE HINDU group of publications
Friday, Jul 09, 2004
Industry & Economy
`No clear theme in the Budget' Mr Yashwant Sinha, former Finance Minister
THE BJP-led NDA coalition is now in the Opposition. That is a fact that all know, but some are still surprised about it. But when Business Line spoke to the former Finance Minister, Mr Yashwant Sinha, his reaction came as no surprise. He did what a former Finance Minister now in the Opposition is expected to do tear Mr Chidambaram's Budget to smithereens. And Mr Sinha sure knows what he is talking about.
Excerpts from the interview:
As a former Finance Minister of the NDA Government, what do you think is the underlying theme of this Budget?
I think what he has sought to do is to give the impression that the theme is agriculture, employment, rural development, education and health. But, unfortunately, this theme is not supported, or rather not borne out in his Budget.
The theme is not growth, the theme is not industry, the theme is not infrastructure, the theme is not capital market, the theme is not the external sector. Nor is it foreign trade. The theme, if at all, is health, education and the common man. So, broadly, it is the social sector and the rural sector, including agriculture. But, as I said, there is very little in this Budget to justify this theme. To give you an example, as far as rural development is concerned, the allocation has gone down from Rs 19,200 crore in the RE of 2003-04 to Rs 16,000 crore a clear decline of Rs 3,200 crore in government allocation in rural development.
Mr Chidambaram also promised that the entire cess of 2 per cent would go to education. Now the HRD budget has been increased by only Rs 1,000 crore, whereas he should get about Rs 2,500-3,000 crore even within this year from the cess on all taxes. So where is all this rest of the money going? He had promised in this Budget also, an employment guarantee scheme. There is nothing in this, no allocation whatsoever to implement the scheme.
So, you see, the Congress manifesto, the CMP, the President's address to Parliament and the Prime Minister's address to the nation all had grand promises, but the Budget has turned out to be a damp squib. Because there is nothing in this Budget to implement those grand promises.
Also, this 2 per cent cess on all taxes is very laudatory but is also very regressive as it is across the board on all taxes. So also the transaction tax which has led to protests on Dalal Street as it has not been explained to the nation. The move is not transparent. So also is the Bihar package.
Do you think it is owing to political compulsions...
I don't think so. Because he has raised the FDI limits on telecom, insurance and civil aviation. He has clearly thrown a challenge to the Left parties which were all squirming in their seats when he was making those announcements. So I cannot say at this stage that he has given much consideration to the sensitivities of the Left. This also includes the dereservation of the 85 items in the SSI list. Certainly, in the sectors such as health, education, rural development, agriculture and other social sectors, he could have done a lot more. The entire CMP is contained with that Rs 10,000 crore which is the additional allocation for the Plan.
It is also not true that the NDA Government neglected these sectors. For, the Economic Survey clearly states that in recent years, sectors such as horticulture, floriculture, cold storage vans and the like received considerable emphasis.
What do you think are the positives, if at all...
I do not think I should comment on the positives as a whole lot of people are commenting on the positives. But, as I said, I am disappointed with the Budget because it is lacking in bold ideas and one cannot say that seven weeks were not enough to take these bold steps. This is not the first time that a Government has presented a Budget during the course of the year. Whenever governments have changed, Budget have been presented in the course of the year. My Budget was on the first of June. But nobody could say that I did not incorporate the basic thoughts and programmes of my Government. Where are the basic thoughts and programmes of this Government in Mr Chidambaram's Budget? They are merely following the programmes that we left behind.
We left the economy in the pink of health. We left when the macro-economic indicators were good and the Finance Minister had tremendous elbow-room. But Mr Chidambaram has been timid in his Budget.
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