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FM Shuns Risks & Innovation in the Growth-Centric Budget

Details: Created on Friday, 18 July 2014 15:51; Hits: 4859

FM Weighing Risks? Image Courtsey: PIB

The Modi Government’s maiden budget has been hailed as please-all, investment friendly, growth-oriented, non-inflationary budget and in other positive descriptions by different stakeholders.

Even critics of NDA Government would privately agree that the Budget would stimulate savings and investments in economy especially in sectors such as housing that have been hand-picked for tax and non-tax favours.

The Finance Minister Arun Jaitley’s strategy to manage fiscal deficit through enhanced plan investments and increase revenue through growth is commendable. It is better than his predecessor’s approach to squeeze plan and non-plan expenditure that results in lower revenue receipts and jobless growth.

Now that the claptrap bandwagon has moved on, it is time to judge the Union Budget for 2014-15 against yardsticks other than the immediate objectives of rescuing the economy from downslide and restarting the investment cycle.

The Budget scores poor marks when judged against the norms of political will to take fiscal risks or initiate non-populist measures. It is bereft of taxation reforms including non-controversial ones such as merging surcharge and additional levies into the main tax. The Budget suffers from credibility deficit, which can be measured by the failure to implement the Government’s intent as stated in the pre-Budget Economic Survey, Election Manifesto and the budget documents.

The Budget, of course, scores high marks when judged against the yardstick of populism, announcement of new schemes with measly allocations and capability to pass off old wine in the new bottle.

Modi Govt should opt for 5-yrs tax hike-free, innovative budget

Details: Created on Sunday, 06 July 2014 07:35; Hits: 6503

Sniffing innovation in budget-image courtesy: PIB

The Narendra Modi Government is treading the path laid down by the UPA Government. It is also working in the same fashion as any previous government-proceed as advised by the bureaucrats and make select deviations necessitated by political compulsions.

The new Government has so far done nothing creative in its first month of operation. It has not made any worthwhile announcement. Even the organizational restructuring of the Government achieved through clubbing of certain ministerial portfolios is nothing but slipshod implementation of certain recommendations made by Administrative Reforms Commission (ARC) during the UPA regime.

With monsoon set to be deficient, the Government faces an uphill task of taming inflation and accelerating growth without putting additional burden on the common man.

The new Government has to think imaginatively to usher in Acche Din (good days) for all – work opportunities for all, growth for all, essential amenities for all, peace for all and happiness for all. The annual budget to be presented by the Minister for Finance, Defence and Corporate Affairs, Arun Jaitley, on 10th July would indicate whether the Government has the political will to embrace innovative and good governance.

Before suggesting a few ideas for tax-free and imaginative budget, let us see how the Government has so far failed to live up to the public expectations. It did not bring out a white paper, listing the major socio-economic challenges faced by the country and suggesting the way forward.

It did not put in public domain numerous reports and studies on national development and social welfare that UPA Government kept under the wraps, making a mockery of the Right to Information Act.

Mr. Chidambaram, please look at the preach-practice deficit too!

Details: Created on Friday, 28 February 2014 06:53; Hits: 5264

FM's Picture Courtesy PIB

Interim budget serves as a pedestal for the outgoing Finance Minister to pontificate. The urge to lay down the agenda for the future is more when the incumbent knows that the ruling party would not return to the power after the elections.

Mr. P. Chidambaram has thus rolled out a 10-point ‘A Vision for the Future’ in his 2014-15 budget speech. He perhaps aped Dr. Manmohan Singh, who had also unveiled his 10-point vision in the Interim Budget speech for 1996-97. Dr. Singh had labeled his vision as ‘medium term objectives for accelerated economic and social development’ over the next five years. After the elections, Dr. Singh had to sit on the opposition benches in Rajya Sabha.

Some of the objectives identified by both of them in their respective speeches have been articulated by their predecessors as well. This is because certain objectives remain eternally elusive due to the politicians’ short-sightedness and obsession to shower favours on different constituents of the electorate.

Take the case of price stability and growth that figures as the third task in Mr. Chidambaram’s vision. Dr. Singh had listed it as the first among his medium-term objectives by pitching for 7-8% annual growth in a ‘framework of reasonable price stability.’

The issue of growth with price stability has been articulated by outgoing as well as incoming finance ministers (FMs) for the last several decades. To be precise, this issue has been a fixation right from the first budget speech after the Independence.

Don’t degenerate fiscal responsibility into a set of malpractices

Details: Created on Friday, 24 January 2014 07:00; Hits: 5655

Presenting the 2013-14 budget, Finance Minister P. Chidambaram stated: “In September, 2012, Government accepted the main recommendations of the Dr. Vijay Kelkar Committee. A new fiscal consolidation path was announced. Red lines were drawn for the fiscal deficit at 5.3 percent of GDP this year and 4.8 percent of GDP in 2013-14. I know there is a lot of scepticism.” Yes, Mr. Chidambaram, the well-justified skepticism is now transforming into derision with the Government trying both new and old tricks to prove that FM’s red line on fiscal deficit for 2013-14 has been respected.

With the firing of all cylinders from the accounting tricks & jugad domain, it would be hardly be surprising if FM manages to adhere to budgeted deficit in the interim budget for 2014-15. Mr. Chidambaram is bound to leave a lot of unaccounted or under-estimated fiscal liabilities to his successor who in all probability would be a non-congress, non-UPA person.

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FM Shuns Risks & Innovation in the Growth-Centric Budget

Modi Govt should opt for 5-yrs tax hike-free, innovative budget

Mr. Chidambaram, please look at the preach-practice deficit too!

Don’t degenerate fiscal responsibility into a set of malpractices

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