Wednesday, July 30, 2014
 
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Fractured statement of national accounts 2013-14



By Dr. Nirmal Kamal


P.C. Chidambarm was correct when he said development is not possible without higher growth, at the very outset of presenting his 8th National Budget 2013-14 on Feb. 28, 2013. Justifying budgetary recommendations in his introductory speech, he also said that the present budget 2013-14 is prepared keeping in view higher growth with focus on human development and truth on the lines of recommendations of Vijay Kelkar Committee report. To this extent the Finance Minister appears correct as the budget 2013-14 focused more on women, youth, SC, ST and disabled sections with catchy schemes such as, i) earmarking of Rs. 1000 crore “Nirbhya Fund” for the security of women, ii) Rs. 1000 crores initial capital for India’s First Women’s Bank under public sector, iii) Rs. 1000 crore for skill development of 10 lakh youth to enhance employability and productivity. These are the specific programmes for women and youth besides other various schemes for children, SC/ST (4,156 crores) and disabled sections Rs. 110 crores, midday meal scheme, skill development schemes, various scholarships for SC/ST youth etc. to be programmed by the Ministry of Social Welfare, Ministry of Child and Women Development etc. The budget 2013-14 has the plan expenditure of 5,55,320 crores while non planed expenditure is double the plan expenditure of Rs. 11,09,975 crores. The other highlights of the budget 2013-14 entail 45% hike in Rural budget, (Rs. 80,000 crores for Rural development) 14 % hike in Defense budget which totals 2,03,672 crores. Education, Health Sector ,too, have been allocated voluminous amount of Rs. 65,867 crores and 80,194 crores respectively.


A cursory look at the budget appears quite fascinating when the women, youth, SC/ST disabled received prime focus with special reference to “Nirbhaya Scheme” i.e. some sections under social sector are made to play as bait in the mind of nation eagerly waiting budgetary announcements. Briefly read budget by the Finance Minister lacked details which were for obvious reasons avoided.But as the maxim goes that the “devil appears in details”, the details will only show the growth possibilities. Yet some assessments can be framed. Therefore, a second look at the budget 2013-14 gives a weird picture of the truth concealed behind the statistics of budget 2013-14. The second look exhibits the entire exercise is nothing but few sops for middle class who every year except some concessions in the form of tax rebates to relax their pockets. This class miraculously is escaped of any rigorous tax as already this class is over burdened with frequent hike in fuel prices which has escalating effect on food prices also. The requirements of middle class youth is also taken care when duties / excise is reduced on readymade cotton, textiles, leather products and axing on luxurious items used by super rich, is nothing significant to drive the economy towards the path of growth. From this angle, budget 2013-14 is more a statement of national accounts rather than a budget meant to steer out the economy from glooming situation and achieve growth at the end of the tunnel. Targeting growth rate at 8% with aim to reduce fiscal deficit to around 4% by roping in corporate sector comprising only 42,800 families whose taxable income is minimum 1 crore with surcharge of 10% seems a partial bail out but not a successful venture seemingly as this burden is imposed only for one year. Advocate turned economist-Finance Minister has not fiddled properly with economic parameters neither he has been advised that for economic growth, investment on supplementary infrastructure is important but at the same time basic components of infrastructure such as power generation, manufacturing sector, other viable exploration of mines and most important employment generation also require consistent investments to fulfill the budgetary claims of high growth, squeezing of fiscal deficit and controlling of inflation.


The essential component of budget is the sources of finance and to finance expenditure the present budget make clear only one source that the 10% surcharge corporate sector with potential of minimum one crore taxable income, can support the plan expenditure to some extent. The message is also very clear that by leaving the common man untouched by any tax, either the government has understood the plight of common man or understood the significance of this class as voter and so tapped the potentiality of corporate sector for the first time to reduce persistent deficits due since long. The comfort of “aam aadmi” who is every now and then protesting on the streets against the government weakening UPA-II finally gets the centre stage.
But the devil in details point out that this budget which is only a fractured statement of accounts was more prepared keeping 2014 elections in view. The sugar quoted pill is meant to enthuse women and youth that their requirements are taken care. The UPA-II infact was desperately a need of strategy for the 2014 elections. It reminds me the statement of PM and UPA Chairperson that sacrifice of “Nirbhaya” will not go waste. Certainly UPA-II has found opportunity in budget 2013-14 to win the hearts of youth a potential number of middle class voter. Remember, Dec. 2012-Jan. 2013 had casketed entire country with angry youth against most hatred crime of rape against women in entire India. UPA-II is true to its committed political strategy which now is fabricated around weaker sections under the social sector in this budget 2013-14 to be encashed in 2014 elections. Attractive schemes for youth and women, though is quite appreciable, enhancing defense (infected of various scams) budget and investments on building, roads as well 10% surcharge on only 42,800 identified families with taxable income of minimum 1 crore each for one year only does not speak of sound economics but a strategy to come back to the power again in 2014.


(Opinions expressed in write-ups/articles/Letters are the sole responsibility of the authors and they may not represent the scoopnews.in)


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