The Hindu Business Line : Budget is not without music

The Finance Minister has taken some tentative steps by ordering excise exemptions for tractors, farm implements, dairy and food processing equipment. One only wishes he had done more.

AFTER five long years we have had a Budget speech by someone who knows what he is talking about. The nature of our finances and the pattern of previous commitments give a Budget planner very little flexibility. Interest takes away a tad over 28 per cent, salaries and pensions about 10 per cent, direct subsidies nearly 11.5 per cent, Defence another 12 per cent and so what is the Finance Minister really left with? The artistry is in the speech and in seeming to create something new with the old template. This Mr P. Chidambaram has done exceptionally well.

The Budget is not without music. For the first time in over two-and-half decades an attempt has been made to correct the adverse trend of central assistance to Bihar. The State gets a special package of Rs 3,350 crore. It is a small package in relation to the deprivation Bihar has suffered, but a big first step. What Bihar's 13 ministers in the NDA government did not do in five years, Mr Laloo Prasad Yadav seems to have achieved in 40 days!

Mr Chidambaram has, by levying a 2 per cent cess for education, added over Rs 4,000 crore to the HRD kitty. This increase will kick-in in the future. This year the HRD budget increased by about Rs 1,000 crore to Rs10,625 crore, which means that we are looking at an outlay of almost Rs 15,000-16,000 crore next year. If this happens it will be no mean achievement. The UPA Government would then have truly beaten a new path.

Another pleasing note is sounded by the new income tax free regime for new agro-industries. It is a good first step towards an overall tax-free regime for the entire agro-industrial sector. The Finance Minister has taken some tentative steps by ordering excise exemptions for tractors, farm implements, dairy and food processing equipment. One only wishes he had done more. Even so what he has proposed for this year are steps in the right direction.

The proposed capital expenditure as a percentage of the total budget is an improvement over last year. This year the government proposes to spend Rs.53747 crores or 11.24 per cent as opposed to Rs. 44131 crores or 9.35 per cent last year. But in this matter in particular the proof of the pudding lies in the eating. Each year as the financial year draws to a close there is a frenzy of programme cutting and the capex ratio suffers. One hopes that things will be different this year?

Having said this much, I will venture that this is still not a path breaking Budget. At times it tries to be much too clever. What does a guarantee of a job for 100 days for every family mean, when the problem is that the rural and unskilled worker is assured of a job for only about 180 days a year? That still leaves him/her with the task of fending for the rest of the family for another 185 days. Proposing 100 days is typical of the mindless tokenism bureaucrat's love. One would have thought that a government that has so many eminent economists, the Prime Minister downwards would have been more intelligent about this?

(The author is with Centre for Policy Alternatives. Email: cpasind@yahoo.co.in)