Jaitley at the winter session. Finance Minister Arun Jaitely’s Budget 2015 is essentially a sequel to his grocery-list budget of 2014 and is similarly hobbled by a clear mismatch between its stated objectives and how it plans to achieve them.
Arun Jaitley’s budget speech on the 28 February 2015 was a huge improvement on his first speech made on 10 July 2014. Not only did the crisp 90-minute speech begin with a pedestrian Urdu-Hindi couplet and end with a Sanskrit shloka it was a full 45 minutes shorter than the two and a quarter hour tedium we endured last year.
And that is about the only complimentary observation one can make about this year’s budget.
Like last year, this year’s budget too is a confused statement of the vision of what the government wants to do and how it intends to achieve it.
Arun Jaitely is not only clever, he is too clever by half. And true to character the finance minister started of his speech talking about agriculture and extending eight and a half trillion rupees (Rs. 8,500,000,000,000) to farmers. As usual the minister neglected to explain what would be the government’s role in something that is and should be between banks and farmers. He also neglected to point out that priority farm loans are given at 7% to all farmers and at 4% to those farmers with a record of timely repayments. These loans are therefore a major burden to banks that are already reeling under non-performing assets or bad loans of more than Rs. 2.8 lakh crores.
Underlining this government’s dichotomy in what it says and what is does was the minister’s announcement about the much criticised MGNREGA. Just a day earlier Prime Minister Narendra Modi had derided the rural employment guarantee Act as being a most useless scheme and ridiculed the opposition Congress party calling it a “living example of your failures.” And what does Jaitely do? He announces an increase of Rs. 5,000 crore for the very scheme.
Speaking of schemes, the finance minister announced a new one for minorities – “Nai Manzil” that will work with school dropouts among minorities. However, despite this new scheme there was no increased allocation of funds and the total allocation to the Ministry of Minority Affairs remains at a little more than Rs. 3,000 crores. He also didn’t explain why nearly six hundred crores remained unspent from the budget last year.
This Budget gives Rs. 2,510 crores for “Digital India”. The previous budget had said this endeavour would cost Rs. 1.13 lakh crores. Again, Jaitley forgot to mention once small crucial detail – Digital India requires 7.5 lakh kilometres of optical fibre to be laid to connect all villages across the country and there was no clarification on who would pay for this mammoth project and how would it be financed.
Similarly the 100 smart cities project which was given Rs. 7,000 crores last year finds no mention in this budget. Has it been forgotten?
The largest increase is for Defence, a hike of nearly Rs. 25,000 crores! What is this for? What war are we getting ready for? The soldier who has been promised one rank one pension by the ruling party has again been ignored. And there is no mention of any outlay for paying the ex-servicemen what is due to them.
The cuts are everywhere. The most blatant being the severe cut in the health budget. The finance minister first said, “Good health is a necessity for both quality of life, and a person’s productivity and ability to support his or her family. Providing medical services in each village and city is absolutely essential.” And then he slashed the heath budget by nearly 20%!
The dichotomy, or should we say hypocrisy, was further displayed by the nearly fifty per cent cut in the allocations to the ministry of women and child development. Primary education has been slashed and so has the budget for the environment ministry.
The corporate sector, however, was happy – for some time. They had been promised a reduction in tax, down from the present 30 to 25 per cent. This tax rate would be made operational gradually over the next four years. However, the finance minister warned that all exemptions would eventually go.
An exuberant corporate sector responded by hailing this move but refused to put their money on the budget and the stock market fell by nearly 250 points. This was the most bizarre outcome on budget day. Industry leaders falling over each other in trying to complement the government but their fund managers were rushing to sell stock!
By the end of the day, what was obvious was the confusing ways of our government – on one hand it swears it will end subsidies and then goes straight ahead and allocates 2.27 lakh crores on what it itself has often said is wasteful expenditure!
It wants to give the middle class some evidence of Achche din, but only gives out small increases exemptions on medical expenses from Rs. 15,000 to Rs. 25,000 and travel allowance from Rs. 800 to Rs. 1,600 rupees a month.
There have been small cuts in excise duties in strange times. So leather shoes worth Rs. 1,000 are now cheaper. And if that is difficult to explain, go figure the reduction of duties on imported hazel nuts!
Seems more a political analysis than a economic one
Some mindless people will anything but the fact remains its a Very Good Analysis with the fact