At the same time, the FM wants to bring economy back on road to fiscal responsibility.
Days before he presented the Union Budget 2010-11, a contemplative Pranab Mukherjee told friends one evening: “I am the last finance minister to leave behind as my legacy, a fiscal deficit,” indicating he would do everything over the next four Budgets to bring the Indian economy back on the road to fiscal responsibility.
But this time, he was hamstrung by another mandate, this one from Congress President Sonia Gandhi. Every speech made by Sonia Gandhi and Rahul Gandhi in the last 30 days has mentioned the “pro-poor face” of the United Progressive Alliance (UPA) government.
Both elements were reflected in this Budget. Mukherjee committed the government to reducing the fiscal deficit progressively, beginning with 2010-11 when he said he would bring it down to 5.5 per cent, 4.8 per cent in 2011-12 and 4.1 per cent in 2012-13. Social sector allocations were increased to Rs 1 lakh crore and 37 per cent of his Plan outlay in this Budget was for the social sector.
Few know that news of Mukherjee’s appointment as finance minister was conveyed to him by Sonia Gandhi. He was later congratulated by the prime minister. Today, the first person to congratulate him after he had finished reading the Budget speech was Sonia Gandhi. The PM lauded his Budget a few minutes later.
Rahul Gandhi had an unpublicised meeting with Mukherjee a few days before the Budget. The result was an allocation of Rs 1,200 crore for the development of the Bundelkhand region. Gandhi’s emphasis on the development of a youth brigade also found an echo in the Budget: a substantial allocation for skill development.
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The unusual allocation for a region-specific green revolution was a concession to Mukherjee’s area of influence and also due to electoral compulsions. Orissa will be an unwitting beneficiary of Rs 400 crore meant for a green revolution in the East — Bihar, Bengal, and the north eastern states. Both Bengal and Bihar are to face Assembly elections between now and next year.
Mukherjee said about his Budget: “I had three objectives before me while preparing it — quickly coming back to the growth trajectory of 9 per cent, fiscal consolidation and inclusive growth. I have not imposed any new tax and have partially rolled back the excise waivers because I feel industry is already in revival mode”.
However, the Budget had its critics. On behalf of the Left parties, CPI(M) MP Sitaram Yechury said the Budget would be “totally counterproductive to the stated objective of the government of controlling inflation and boosting inclusive growth”.
“The relief for the common man from income tax benefits will be wiped out by the money he will shell out because of the fuel and urea price hike,” Yechury said. Himself an economist, Yechury added that the government had increased its expenditure by 8 per cent whereas the rate of inflation was more than that. So in real terms, the government’s increased expenditure amounted to nil.
The Bharatiya Janata Party (BJP) also criticised the government for window dressing. Former party president Rajnath Singh said: “Farmers need cheaper credit and easier repayment facility but the government gives them only the increased credit targets which have been raised to Rs 3.75 lakh crore. When it was re-elected in May last year the UPA promised foodgrains for the poor at nominal prices within 100 days of coming to power. Even after 10 months the Government still holds out empty promises of better management of food security.”
Former finance minister Yashwant Sinha said: “At the end of his budget speech, the finance minister claimed, ‘The Budget belongs to aam aadmi. It belongs to the farmer, the agriculturist, the entrepreneur and the investor.’ Nothing could be further from the truth.”