Union Budget 2007 - 08 : Postmortem

In the Arthashastra written about two millenia ago…the famous Chanakya stated that "in the happiness of his subjects lies the king's happiness, in their welfare his welfare..." Perhaps the announcement of multiple schemes addressing the immediate concerns of the common man to bring about societal welfare in the recently announced Union Budget 2007 might have perhaps pleased Chanakya.

The presentation of the Budget this year enjoyed a unique position in the milieu of the robust economic growth yanking upto 9.2% and overall growth of the economy at a scorching velocity. It is evident that the Finance Minister may have found it difficult to repeat the ‘dream budget’ which he presented nearly a decade ago, where direct taxes were reduced dramatically and the process of liberalization was given a fresh impetus. But what is astounding is that the budget does not endeavour to reshape the future of the economy and bring about a balanced growth and development. The Budget 2007 – 08 is undoubtedly spiced with both positives ane negatives.

On the fiscal front, the budget has taken enthusiastic strides to achieve the overall objective of National Goods and Services Tax through the phasing out of CST. Also adhering to FRBM targets has been given priority in the Budget. Various initiatives in the financial sector addressing formal credit access especially for the rural and weaker sections has been included in the Budget which is yet another feather on the Finance Minister’s cap.

The Union Budget 2007 – 08 comes at a historic tipping point in India’s economic experience when demographic and global factors have consolidated to set GDP growth on a higher trajectory. Revenue buoyancy in 2006 – 07 has helped create space for public spending on social and physical infrastructure upgradation allowing higher investments for the coming year.

Nevertheless, on the downside, while it has been evident that sectors in which private enterprises operating in a liberal market environment are experiencing rapid growth to drive the overall economy, the unlocking of private entrepreneurship has not been given adequate attention. Sectors of R & D, energy, financial services and other sectors to incentivise private sector intitatives and investmenets have been partially addressed in the budget. The convergence of knowledge and technology is necessary for sustaining the growth momentum But significant measures for research in industry and agriculture are lacking.

What one cannot ignore is that Union Budget 2007 – 08 is clearly yet another precious opportunity lost on various counts. To elaborate, we shall look at some of the core sectors of the economy:

Agriculture:
Although necessary and justiciable emphasis has been laid down on agriculture, the actions taken are scarce. Measures like more credit, restocking ground water reserves etc are welcome but issues such as suicides by cotton growers, iniquitous advantage to OECD farmers, in establishing market linkage and creating value addition to agricultural produce, streamlining and liberating cooperatives etc have not been given due weightage. With mounting Inflation even as farm sector languishes, a classic case of neither the farmer nor the consumer being happy is what will be the outcome!

ITI’s:
Although efforts have been taken to improve the Infrastructure facilities in ITI’s and it is delightable to note that allocations have been increased for varous merit cum means scholarship schemes including schemes targetting mintorities, SCs, STs etc we cannot disregard the fact that are still millions of educated youngsters who lack skills and are unemployed. A massive national programme for promoting proficiency is vital today. Not much significance has been given to issues of employment and skill promotion in the budget.

Education:
It is sad that even now we only emphasize enrolment and literacy. Sarva Siksha Abhiyan remains to be our only flagship programme. Although schemes have been introduced to ensure enrolment, recent surveys (ASER 2005 and 2006) indicate that 28.5% of all rural children in 11-14 years age group attending both private and public schools, are not able to read a short story (one paragraph) of grade 2 difficulty; 45% cannot do a simple arithmetic division. It is not mere literacy but improvement of efficiency due to literacy that should have been the target. Modern economy or a robust democracy with only a smattering of literacy cannot sustain. Every child infact must be guaranteed twelve years of school education which prepares her for productive work or higher education.

Handlooms:
The handicrafts sector has been inundated by years of neglect and decay. Decisive measures such as a national programme of diagnostic survey of all handicraft clusters, support by way of credit, technology, infrastructure, skills and marketing could have created wonders for this sector. If restoration of certain handicrafts is implausible, then endorsing alternative skills and reemployment meaures could have been taken up. But the Budget did not explore this option.

Migration:
Migration from rural to urban areas and depopulation of rural areas is not news to India. An intensive programme to promote in situ urbanization, provide amenities and services, encourage local migration through market incentives would have invited plaudits. The Budget has overlooked the escalating challenge of unimpeded migration and augmenting urban poverty.

Power and Transport:
Power and transport sectors needed special attention. Decentralized distribution of power through the community or franchisees, metered power distribution with effective energy auditing and massive up-gradation of distribution network to prevent technical losses are vital to transform the power sector. Our cities are slowly getting paralyzed because of bad transport is increasingly urban. High cost public transport choices like tube rail (about Rs. 150 Cr per KM) must give way to low cost models like rapid bus transport system, and integrated management of rail and road transport. Lack of focus on these sectors is indeed perilous.

A balanced budget would anyday ensure balanced development. Although the budget did not live up to its expectations its spirit cannot be ignored. It is eventually in the hands of people to make it work beyond expectations or fail.

Leaving aside the budget, we should now look at how we as individuals should contribute to uplift the economy. At one point in time during the Budget, the Finance Minister expressed concern on not the dearth of schemes but the dearth of initiative to implement the schemes. It is time, we realise the depth of this statement. It is in our hands to make or break the economy. Many economies across the world have developed not only due to effective planning but also due to efficient implementation. We still have the choice to be winners or quitters.

What are we then waiting for…