NEW DELHI: Finance Minister Pranab Mukherjee has done what he was expected to do. In his 2012-13 budget, Pranabbabu has acted as a crisis manager of the second United Progressive Alliance Government and has come out with a policy package which may not be bold or innovative but has some sops across the population to ease tensions. He perhaps planned for a big reforms push but the big setback for the Congress in the state assembly polls and major crisis in the Government over the Trinamool Congress derailed his plans at the last minute.
For the common tax payers, there is some small relief in the raising of the income tax exemption limit from Rs. 1.8 lakh to Rs. 2 lakh and rationalization of the tax slabs but this small gains may be neutralized if the price levels start rising again. That is why, the finance minister has been very specific about steps to control the prices and keeping the expenditure side within limits. One positive feature of the budget is that without promising big, the budget proposals are slated to help the expansion of the infrastructure projects in a big way, especially the power sector. Similarly, the foreign investors are getting more opportunities to operate in the Indian market.
There are major objectives in Pranabbabu’s 2012-13 budget proposals. There is good focus on the domestic demand driven growth. This means the possibility of creation of more job opportunities in the country. This will be accompanied by big boost to private investment. The supply bottlenecks are adversely affecting the economic growth these days and the budget this time is meant to take care of those bottlenecks in the areas of agriculture, power and transport.
There is a big emphasis on the setting up of power projects in the country, especially in the private sector including the foreign funded projects. This is necessary for the high growth of the economy in the twelfth plan period if the country has to achieve a growth rate of ten per cent. During the twelfth plan, infrastructure investment will go up to Rs. 50 lakh crore with half of this expected from the private sector. The budget has doubled the quantum of tax free bonds for infrastructure projects from Rs. 30,000 crore this fiscal to Rs. 60,000 crore in 2012-13.Further the external commercial borrowings will be allowed to part finance the power projects.
This is a major step and this should help in creating the right growth momentum during the next fiscal. Alongside, there is a big incentive for the foreign investors. The budget has allowed qualified foreign investors to access Indian corporate bond market. This is not controversial at all and there should be no political opposition to this. But on the politically sensitive issue of allowing 51 per cent foreign direct investment in multi brand retail, the finance minister has once again talked of consultations with the states for arriving at a consensus. That way, the Government has learnt its lessons and instead of imposing it from above, has opted for the path of consultations in respect of FDI in retail.
UPA’s major ally Trinamool Congress may not be happy with the budget proposals for the farmers and their MPs have made their disappointment clear, but the fact is that the Government has very little option to earmark funds for farmers after its commitment to the Food Security Bill and the implementation of the programmes. All these programmes in the rural areas and for the farmers are a part of the UPA’s strategy of inclusive growth. To ensure that the objectives of the National Food Security Bill is effectively realized, a public distribution system is being created using Aadhar platform. A National Information Utility for the computerization of public distribution system is being set up. It will become operational by December 2012.This implementation of Food Security Act provisions has major dimensions and it can change the economy of the rural areas in a big way. Everything depends on its proper implementation. The UPA-2 Government is desperate to implement this programme because of its immediate impact on the people below the poverty line as also other pauperized masses. This massive programme can act as a major propaganda vehicle for the UPA government in the 2014 Lok Sabha elections.
Agriculture’s plan outlay has been increased by 18 per cent. It should have been increased by more. The budget statement has agreed that the easternIndiahas succeeded in increasing the production and productivity of paddy. The budget has raised the outlay on this special scheme for easternIndiafrom Rs. 400 crore to Rs. 800 crore in 2012-13.Agricultural credit is the core of the growth in food production. Farmers need timely access to the affordable credit. The budget has proposed to raise the target of agricultural credit to Rs. 575,000 crore in 2012-13 representing an increase of over Rs. one lakh crore as against the current fiscal. This is a substantial rise taking into account the present finances of the Government but the need is for more credits for the speedy growth of agriculture.
The Government has missed big chance of generating substantial funds from the illegal money kept in the country as also abroad. Especially in regard to the funds kept by Indians abroad illegally, FM should have done some concrete steps like announcing an amnesty for a limited period to mobilize a minimum Rs. 20,000 crore to Rs. 50,000 crore. The measures which have been mentioned do not include any major initiative to bring funds from abroad. A golden opportunity to mobilize huge resources has been missed. The UPA Government has many things to hide in respect of illegal funds abroad, otherwise why there was no real action programme in this budget.
So, it has been another missed opportunity once again. The countrymen has to bear a so so budget but the only solace is that the inflation might be under control unless the oil prices rise too high and the growth momentum may be back, if not in 2012-13, certainly in 2013-14. (IPA Service)