oppn parties Union Budget: Neither Here, Nor There

News Snippets

  • Supreme Court warns Rahul Gandhi to be more careful in future but drops contempt proceedings in the "chor" case
  • In a flip-flop, Vodafone CEO says sorry to the government, sys no plan to exit India
  • Sabarimala case referred to a larger bench as the court says several contentious issues need deeper examination
  • 16 killed as the vehicle they were traveling in plunged into a deep gorge near Jammu
  • Vodafone CEO seeks government relief, saying India operations on the verge of collapse
  • Three teenagers killed in a major accident in Kolkata's New Town area when their Honda City rammed into a road divider and a Metro pillar. The car was mangled
  • Vishwa Hindu Parishad not to publicly 'celebrate' Babri Masjid demolition day this year, all events will be closed door
  • JNU students march against the steep hike in fees, keep HRD minister Ramesh Pokhriyal stuck at the venue of the convocation
  • USFDA says Cytotron, an anti-cancer kit developed by Bengaluru based Rajah Vijay Kumar, is a "breakthrough device" for treating liver, pancreatic and breast cancers
  • Car sales show a minuscule uptrend after declining continuously for 11 months
  • Industrial output contracts by 4.3% in September, the worst decline in 8 years
  • Centre defends abrogation of Article 370 in the Supreme Court, says the power under it was used by the President six times previously
  • Legendary singer Lata Mangeshkar admitted to hospital with lung infection, put on ventilator
  • Shiv Sena MP Arvind Sawant quits as Union Minister
  • National Security Advisor Ajit Doval met the leaders of both Hindus and Muslims in Delhi on Sunday to ensure peace and harmony is maintained after the Ayodhya verdict
Supreme Court dismisses plea for review in Rafale case, says no need for roving inquiry, maintains clean chit to government
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Union Budget: Neither Here, Nor There

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
As expected, the union Budget this year was a political statement but a bad one. The BJP forgot that the middle class has always been its staunchest supporter. Yet, the budget completely ignored it. Apart from that, the government has failed to spell out how it is going to finance the grandiose schemes it has announced in the budget. Hoping for tax collections to improve and more people to come under the tax net and hoping to finance the welfare schemes from that money is hoping too much.

On paper, the budget will give the necessary push needed to the economy. Massive investments are envisaged in the infrastructure sector. If all of them fructify, hundreds of thousands of jobs will be created and companies that provide materials to this sector, viz. cement, steel, pipes, bricks etc will see booming business. But all this can only happen if the finance minister can raise additional funds. Where is the money?

The health insurance scheme announced for 10 crore families (or 50 crore people, assuming 5 members per family) is truly majestic in its sweep. It will easily be the worldÂ’s most comprehensive government-funded health care scheme. Reports suggest that the premium will come to around Rs 1100 per year. That translates to Rs 11000 crore for covering the entire 10 crore families. Again, where is the money? The finance minister was at his ambiguous best when he said that "adequate funds will be provided for smooth implementation of this program." He did not think it fit to say how and when.

The farm sector does get benefits, but again these will happen only if the schemes announced are implemented. Further, there is a huge risk of runaway food inflation if minimum support price is enhanced too much. Instead, the decision to set up integrated marketing centres for farm produce is better. The government must ensure that there are not too many middlemen in the farm supply chain as they are the ones who corner the profits with the farmer not getting his due.

The prime minister had ranted against protectionism at Davos. Yet, in this budget customs duty on more than 100 products has been increased to protect domestic producers. Granted that it will bring in revenue too but setting up trade barriers is not the way to earn revenue.

If the finance minister is able to improve tax collection and finance the schemes, all will be good. But if indulges in financial profligacy and resorts to borrowing throwing fiscal deficit targets to the wind, it will spell doom for the economy in general and the financial services sector in particular. The NDA government has shown exemplary fiscal discipline in its first three years. One hopes that the trend will continue. As The Telegraph daily put it in its sub-headline, this budget tries to appease all but pleases none.