Aditi Phadnis: Underselling the Budget

PLAIN POLITICS

From a political point of view, it had many positives, but none were highlighted.

It is a truth universally acknowledged, that a finance minister in possession of a good Budget must be in want of some praise. If Jane Austen had been writing a political commentary on the 2007-08 Union Budget in one of the pink papers, she might have put it like this.

Unfortunately, despite a Budget that sends its searchlights sweeping over some of the most neglected areas of political economy today, Finance Minister P Chidambaram can expect only brickbats from his party and left-handed compliments from its leadership. Congress president Sonia Gandhi's first reaction came nearly a week after the Budget. At a meeting of the Congress Parliamentary Party (CPP), she described the Budget approvingly as having aam admi features, but somewhat diluted the effect by saying inflation had cost the party the government in two states. This was not the ringing endorsement the finance minister might have wanted to hear. But hey, you take what you get, right?

The truth is, if Gandhi "" to quote a colleague in a different newspaper "" had had to walk to arrive where she is today, she would instantly have grasped the political opportunities the Budget presents and commended those to her followers.

Instead she lumped the Budget with price rise and revalidated the stance she had taken earlier: of standing by as colleague after party colleague attacked the finance minister for inflation at a meeting of the Congress Working Committee a few days before the Budget was presented. Prime Minister Manmohan Singh alone defended him by pointing out the growth trajectory of the economy.

What could you have done with a Budget such as the one presented last month? What couldn't you have done!

You could have told your party that the centrally sponsored scheme for reviving water bodies should become the route to return to power. "The scheme provides money through the state governments to the panchayats. Get the DMs to get off their comfortable perches, get the panchayats to start digging and let everyone know it is the Centre that's paying for the water they will be drinking. You must start now because once the monsoons hit, especially the southern states, the scheme will become useless," you could have told your humble servants. If you'd been realistic about apportioning blame, you could have added that because of the spectacular performance of the power ministry (which has succeeded in adding 23,000 MW power generating capacity against a target of 41,110 MW in the 10th Five Year Plan) India can look forward to extended power cuts this summer, making it doubly urgent to address the possibility of drought.

That the plan outlay on agriculture has been increased by 15.7 per cent and the social sector by almost 36 per cent should have been clearly spelt out for a set of people, most of whom have only a nodding acquaintance with financial management. The Budget seeks to correct long-term distortions in supply-demand issues plaguing pulses and this should have been the agriculture minister's job, but it is the Congress that is taking things in its hands, because better than anyone else, it is the Congress that understands the problems of the poor, you might have said.

The allocations for the social sector strike the right note as well. If Sonia Gandhi had studied the problems of delivery in education a little deeper, she might have pointed out to the finance minister that dropouts between classes 9 and 12 are as much a result of their economic usefulness in micro-economies as lack of access to schools. If you were heading a party as large as the Congress, you might have asked every MP (and there aren't that many) to present a report from their constituencies on why children don't study beyond class 8. This could have been a dipstick survey for a future input. The BJP or Left Front Budgets didn't provide 100,000 jobs to the physically challenged. Nor were 200,000 teachers ever appointed in one go: but to ensure implementation is the job of the lawmakers, she could have said.

Education is a secular way of minority empowerment. The Budget recognises this. But does the party? There is a big jump in allocations for farm credit in terms of allocation and coverage of farmers, rural employment, housing, irrigation and healthcare and education. Sonia Gandhi's reaction to the CPP: but what happened to the rehabilitation policy? Not even: "thank you for reverse mortgage, the elderly should not have to fight their children for income from property that belongs to them."

The state governments are the vehicles to carry forward Budget promises. How many Congress ruled states are going to capitalise on all that the Budget gives them? We'll see. But MPs from these states will be the first to shoot at the finance minister. No one expects ordinary MPs to understand complex taxation issues like GST. But even the most uninformed ones must know that an increase in the proportion of direct taxes to tax collections is good. Tax collections have increased because corporates have paid 45 per cent more tax over the previous year. In fact, the finance minister's team had wanted to insert several paragraphs in the Budget about how beautifully the Tax Information Network had worked in helping them collecting more tax but he negatived the suggestion.

Thanks should also have been due for not taking a host of decisions he could have: like increasing service tax rates that Chidambaram had every intention of doing; and revoking some subsidies. Doing so would have caused inflation of such a high order, the whines would have turned into howls of pain. It would have made his job a lot easier. But his heart also beats for the common man.

There is fiscal consolidation in the Budget: no service was done by foisting the Sixth Pay Commission on the FM. But the fiscal deficit target is 3.4 per cent after 3.7 per cent in 2006-07. Shouldn't the party be giving suggestions on curbing government spending? Especially as adherence to the FRBM Act that MPs have been party to, is a cornerstone in maintaining the sovereign's creditworthiness? For a Budget such as this, Chidambaram is the most misunderstood man in the government today. Something stinks around here. And it ain't even the Kingdom of Denmark.