Virtuous circle

These objectives are demanding, even daunting, but not mutually exclusive: Each supplements and sustains the other two. When the poor are empowered by spread of education and acquisition of skills, they become integrated in the endeavour of creation of wealth. When rural India prospers, the augmented purchasing power takes demand for goods and services on a high trajectory, with a corresponding fillip to business activity.

Sectors such as textiles, manufacturing, pharmaceuticals, information technology and the services — to mention just the important ones justifiably stressed in the Budget — are capable of generating lakhs of jobs and make it possible for resources to flow back to the rural areas in the form of investment for higher farm production and the needed social and physical infrastructure.

Mr Chidambaram's Budget captures the essence of the virtuous circle of synergy and symbiosis inherent in such a holistic framework. This is where the National Horticulture Mission, National Rural Health Mission, National Drinking Water Mission, National Urban Renewal Mission, National Institute for Training in Security Markets (for all of which he has made ample provisions) as also the legislation meant to strengthen small and medium enterprises fall into their place.

The promised comprehensive Bill proposing reforms in the banking sector is also an alluring prospect with enormous implications for all the other sectors, and may do a lot of good in ensuring a more purposeful, efficient and equitable functioning of the lifeline of the economy.

The underpinnings and linkages he has envisaged to bring about the degree of mutual reinforcement among all the sectors and players to do with growth and development are both conceptually and operationally sound and capable of yielding high dividends if worked in the spirit intended.

A really unusual tie-up is the one between the self-help groups and the commercial banks, which apparently has worked so well as to astound observers in respect of the range and reach of the enormous amounts that had become available at little risk for productive purposes.

Equally tantalising is the creation of the Financial Special Purpose Vehicle for channelling flow of the needed funds for infrastructural development the "glaring deficit" in which is putting paid to all other efforts to bolster the economy and attract both domestic and foreign investment.

Blanked out areas

Mr Chidambaram has carried further forward the idea of gender budgeting that he propounded last year. This will highlight the actual allocations and benefits reaching a vital component of the society that had so far been invisible to policy-makers and fund-providers.

He has now brought the scheduled castes and scheduled tribes also into his scheme whereby the adequacy of their entitlements too will be immediately evident. His emphasis on accountability and transparency in both these respects will reduce the disparities and the prevailing sense of neglect to a considerable extent.

Likewise, a balanced economic growth and distributive justice are sought to be ensured by special arrangements such as the Backward Region Grant Fund, mandatory earmarking of 10 per cent of the allocations for each Ministry for the North-Eastern States, and establishment of a corporation for financing development schemes for minorities.

In an era when the social insurance provided by the joint family system has very nearly broken up, it is a welcome initiative on the part of the Finance Minister to entrust the task of designing a social safety net and scheme for income security for the aged to a to-be-set-up Pension Fund Regulatory Development Authority.

In short, the Budget is so sweeping in its coverage of the things to do and the mechanisms it seeks to put in place as to raise doubts about the implementation being equal to the expectations raised. However, the "action-taken-report" on the promises contained in his Budget of 2004 read out by the Finance Minister raises hopes that he will strive to guard against a shadow falling between announcements and accomplishments.

The Budget, oddly, glosses over, or blanks out, some very relevant areas that are in everybody's mind. One is in respect of the measures the Government plan to pursue to facilitate a greater flow of foreign direct investment (FDI) in capital-intensive sectors.

Mr Chidambaram merely mentioned that at the recent G-7 meeting, the Chinese Finance Minister, meaningfully looking at him, gave out the phenomenal figure of $500 billion received by China as FDI since it opened its economy, with $60 billion flowing into the country in 2004 alone, while India could boast only $4 billion in the same year. One can only hope that the Leftists listening to him got the message.

There is absolutely no inkling in the Budget how far and how fast the Government intends to take the process of disinvestment forward in the coming year and how much is expected by way of proceeds. One can understand Mr Chidambaram's anxiety not to ruffle feathers on both these issues so that his Budget speech has a smooth passage.

As regards the direct and indirect taxes, there is not much that sets the Yamuna (or the Cooum, as the case may be) on fire.

He was listened to in silence, except when he came to the portion about levying a 0.1 per cent on withdrawals exceeding Rs 10,000 from the bank in a single day.

The commotion this caused was out of place, because all that is going to happen is everybody will beat the tax by confining his withdrawal to Rs 9,999!

This is an utterly unwanted diversion, and it is best that Mr Chidambaram drops it at a convenient stage during the Budget debate.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page