Thursday, July 9, 2009

Reviewing Budget 2009

It is very difficult to prepare a Union Budget that could satisfy equally all sections of society, and not at all, at least, in the current economic crisis. There is nothing surprising about it if mixed reactions are being received with regard to the Union Budget presented by the Union Finance Minister Pranab Mukherjee in the Parliament. If this budget does not seem to be fulfilling the expectations of a big section of society, the United Progressive Alliance (UPA) Government is more responsible for it.

Atmosphere Under 100-Day Agenda
When the UPA Government returned to power, policymakers in the Union Government created an atmosphere under the 100-day agenda to make everyone feel that the Union Budget this time would come in the form of a revolutionary document of fundamental changes in economic policy. Perhaps, this was not possible under the current circumstances; therefore, there is no meaning in reactions that term the general budget disappointing.

Despite high expectations, commitment to provide impetus to the growth rate, and an economy struggling with recession, an experienced politician Pranab Mukherjee has presented an overall balanced budget. If he wanted, he could have given momentum to the next phase of economic reforms, but perhaps lack of political consensus stopped him from doing so. Besides it, he has given some concrete signs of bringing radical changes in the economy, e.g., the readiness to take the disinvestment process forward and to take the benefit of subsidy directly to farmers.

Change in Economic Policies
It is believed that the task of bringing about change in economic policies could be done in the coming days also, but it is possible only when all ministries, particularly the ministers linked to finance, trade, and the corporate world would show expected activities. It would also require real support from the Congress and the UPA allies.

In this regard, it cannot be ignored that any other union minister did not show the kind of commitment the new Human Resource Development Minister Kapil Sibal showed for completing his 100-day agenda. It should also be noted here that Sibal is being compelled to retract his steps not because the opposition parties are not in agreement with his reforms proposals, but because a section of the Congress members themselves do not agree with his thoughts.

Hike in Defence Expenditure
Finance Minister patted his own back by increasing the defense budget allocation by Rs. 616.3 billion. The country's defense budget for the current financial year is Rs. 1.66 trillion. In the interim budget also, he had made provision of Rs. 1.41 trillion for it. This means that it is Rs. 209.6 billion more than the interim budget.

Keeping the the last two years' defense budgets in mind, this increase would appear quite huge. In 2007-08, the total defense budget was Rs. 960 billion. It was increased to Rs. 1.056 trillion in 2008-09. Obviously, the increase in 2009-10 is the highest. This makes it clear that the government does not want the defense sector to be affected by paucity of funds. Otherwise, in this time of huge budgetary deficit, it would have at least not dared to go beyond the Interim Budget presented on January 16, 2009.

Other Schemes
Considering the political statements being issued in connection with reforms in the education sector, Pranab Mukherjee had set his own limits. The stock market riding high on a wave of expectations may not have liked the union budget, but it cannot be ignored that despite all kinds of compulsions, the Finance Minister has tried to show wonderful balance. Along with fulfilling the expectations of the corporate world to the extent possible, he has also taken care of the interests of rural and poor people. The decision to emphasize on Bharat Nirman scheme along with announcement to expand the reach of National Rural Employment Guarantee Act (NREGA) is a testimony to the fact. Besides it, the Finance Minister would also have to be given credit for providing reasonable relief to other sections of the society.

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