There is always something that can be found wanting in a Budget, and that something can surely be found in Sitharaman’s maiden Budget if one is determined to discover it
For decades, most analysts agreed on at least one aspect of the Union Budget: That, in the end, the document is a political message. Union Minister for Finance Nirmala Sitharaman did nothing to dispel the notion in her maiden Budget on July 5; indeed, she reiterated the fact through her speech. For instance, she did not read out the allocations made out to various ministries and programmes, saying that they were available in the Budget documents. This was a departure from the usual Budget speeches where the Finance Minister spend a good portion of the address to announcing the allocations — they went up for some and down for others. Those who have been critical of this departure from the trend ought to realise that a Union Budget is essentially a document of intent and purpose and is a roadmap of the government, and not a profit and loss statement.
The political aspect is evident elsewhere too. The Finance Minister not only spoke with pride of the various programmes the Modi government had initiated but also expanded their scope. These are, incidentally, programmes that helped the Bharatiya Janata Party return to power with a bigger mandate than it got in 2014. Sitharaman added some more tasks to the Clean India programme — Swacch Bharat; she has promised more for rural roads, highways, port connectivity, rural electrification. The social sector programmes, which fetched the party rich dividends, were given the pride of place. She did not forget to underline the assurance of piped water for all households by 2024— shortage of water is a big problem facing the country today, and the scarcity of drinking water has hit rural India the most.
These critics, in other words, hoped that the Finance Minister would accept the grim situation on record. But the fact is that the government is already working to tackle drought conditions and farmer distress.
The Modi government had received huge support from the poor after it had managed to cover the last few years, course-corrected its image of being pro-rich. It ensures that the pro-poor thrust it has managed to project in the last few years sustained. The Finance Minister has proposed to levy cess on annual incomes of above three crore rupees (three per cent) and above five crore rupees (seven per cent). She has not succumbed to pressure that corporate India required tax concessions. Instead, she has invited their participation in various massive programmes through the Public Private Partnership (PPP) mode.
Given that this is the first Budget of the new government, which has five years to go, dramatic fireworks in the areas of agriculture, jobs etc have been postponed for now — though it cannot be for long. Governments generally reserve those announcements for the third or fourth year of their term, in order to gain the maximum, politically. But the Finance Minister realised that kickstarting the economy in a way that will help achieve the government’s target of India being a five trillion dollar economy in the next few years, cannot wait. Therefore, a massive push to infrastructure and the rail sector has been announced. The Finance Minister has proposed leasing and financing of aircraft. While she did not set out a structured disinvestment plan of sick Public Sector Units, she did mention the disinvestment of the ailing Air India.
One of the most welcome announcements is for the promotion of electric vehicles, where the government has proposed to make available a string of concessions for buyers and manufacturers of electric vehicles. This should go a long way in tackling pollution, again an area that has become a major crisis millions of Indians face, more so in urban India. There are a number of other measures announced that seek to fortify the government’s image of being pro-poor as well as pro-corporate.
There is criticism that the Budget did not make mention of farmer distress, drought conditions across large parts of the country, and employment-generation measures. These critics, in other words, hoped that the Finance Minister would accept the grim situation on record. But the fact is that the government is already working to tackle drought conditions and farmer distress. Critics can always take the regime to task in case the government seems to be failing in that task. On job creation, the additional emphasis on Micro, Small and Medium Enterprises (MSME) and small and Medium Enterprise (SME), which together form the latest bloc for employment-generation, is a measure that the government hopes will click.
There is always something that can be found wanting in a Budget, and that something can surely be found in Sitharaman’s maiden Budget if one is determined to discover it. Nonetheless, as a vision document and as a statement of intent and purpose backed by finance, Budget 2019-20 must be judged on larger parameters.
1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.