oppn parties Union Budget: Neither Here, Nor There

News Snippets

  • Crude prices fall sharply as Saudi Arabia assures normal production in a few weeks. Prices fall by 5.4% to $65.30 per barrel
  • Sensex tumbles 700 points over fears that rising crude prices will deal a body blow to the tottering Indian economy
  • As Rajeev Kumar fails to appear before the CBI despite several notices, the agency forms a special team to locate and apprehend him
  • S Jaishankar says Pakistan is not a normal neighbour and its behaviour is a "set of aberrations"
  • External Affairs Minister S Jaishankar says PoK in Indian territory and the country hopes to have physical jurisdiction over it one day
  • Barasat Sessions court near Kolkata rejects Rajeev Kumar anticipatory bail application citing lack of jurisdiction as the reason
  • PM Modi celebrates his birthday with Narmada aarti and later has lunch with his mother.
  • All 6 Bahujan Samaj Party MLAs merge with the Congress in Rajasthan
  • Bengal CM Mamata Banerjee to meet PM Modi on Wednesday, state issues on the agenda
  • Pakistan to open Kartarpur corridor on Nov 9
  • Rajeev Kumar, ex-police commissioner of Kolkata and wanted for questioning in the Sarada scam does not appear before the CBI despite the state administration requesting him to do so
  • Supreme Court asks the Centre to restore normalcy in J&K but keeping national interest in mind
  • As Trump accepts the invitation to attend a programme in Houston with PM Modi, India rushes to settle trade issues with US
  • After drone attack on Aramco's Suadi Arabia facility, oil prices jump 19% in intra-day trading causing worries for India
  • Imran Khan raises nuclear war bogey again, says if Pakistan loses a conventional war, it might fight till the end with its nuclear arsenal
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
oppn parties
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.