The Union Budget:A strange string of announcements: PPP
In his budget speech, Finance Minister Pranab Mukherjee quoted a line from William Shakespeare’s seminal play, Hamlet- The Prince of Denmark. , “ I must be cruel only to be kind,” he said, suggesting that it is time for the government to take tough actions to ensure a better future. But his actions were in dissonance to his words. The Union Budget presented by Finance Minister Pranab Mukherjee was a strange string of announcements that made all the right noises about the problems faced by Indian economy, but was woefully inadequate in terms of policy measures to control these problems. Let us start from inflation. Over the past many months, almost all the top leaders of UPA government have admitted that common man deserve relief from the unconscionable levels of inflation that we have seen in the past 3-4 years. But despite this, the Finance Minister, increases the Excise duty by 2 per cent. Not only this, he extends the scope of service tax. All these enhancements are going to be passed on to the final consumer, and will fuel the inflation to further heights. Amidst such circumstances, the minor income tax reliefs that the finance ministers seems to have offered appear to be a cruel joke.
By not controlling inflation, the government wants the common man to struggle to eke out a living, but on its own it continues to live at unconscionably high expenditure as is shown by the humungous government debt which close to 46 per cent of country’s GDP. Even when saddled with this monstrosity, there is no attempt to mend by the UPA government to mend its ways. The fiscal deficit is in excess of 5 per cent, way beyond the permissible limit of 2 per cent. Once you include the fiscal deficits of our profligate states, than we are staring at a figure that would reveal that India is on a precipice of debt disaster that can have catastrophic consequences for the economy. So basically India is facing a situation where we are saddled with the two most critical problems of a modern economy i.e. high inflation and high deficits. Add to it the political pusillanimity which has become a hallmark of the UPA government. With such a deadly cocktail in offering, it is obvious that foreign investors are not going to savour the prospect of coming to India (leave aside the Foreign Institutional Investors). With no investment coming in green field projects, I fail to see, how can the finance minister be hopeful of attaining GDP growth levels of 7.8 per cent.
Such talk is nothing but political sophistry aimed at diverting attention from government’s own inadequacies. The UPA government seems to develop cold feet on many of the initiatives it itself had pursued with great gusto initially. Mr Mukherjee’s speech today was resoundingly silent on Direct Tax Code as well as on any road map to implementation of Goods and Services Tax (GST).
Increase in disbursal of credit to agriculture is welcome but government has again been found wanting in ensuring the proper distribution of this credit. Independent researchers have shown the politicians have used this agriculture credit scheme to further their own objectives. Data shows, that the agriculture credit is disproportionately high in the constituencies of influential politicians and inadequate in areas where there is a dire need of funding.
There have been no reliefs or incentives for small scale manufacturers and even the sunrise sectors of biotech, IT, telecom and media- which have largely fuelled India’s growth in the last few years. There is in incentive for capacity expansion, which means, that fewer jobs would be created but that India’s economic growth would continue to buoyed by consumption. While consumption is an important facet of economic growth, an overlying importance of consumption instead of investment to fuel economic growth can be problematic. This problem is further exacerbated if the country is passing through a crisis of high inflation. Unfortunately, we are witnessing both consumption led growth as well as high inflation. It is staggering that the government led by an eminent economist, has chosen to do nothing about it.
This is against the interests of the workmen-AITUC
Com O P Mehta Secretary All India Trade Union Congress, Ludhiana and Com D P Maur – Secretary Joint Council of Trade Unions Ludhiana has criticized the union finance minister for decreasing the interest rate on the Employees Provident Fund from 9.5 to 8.25%. This is against the interests of the workmen who have minimum saving from this. He warned the government to revoke this decision otherwise face stiff opposition from the working people.
CPI Ludhiana unit termed the budget to be inflationary
The Communist Party of India Distt. Ludhiana has termed the budget to be inflationary as increase in the service tax and the excise duty will lead to increase in the burden on the people. Marginal increase in the tax slab exemption is a mockery with the people as it no where meets the price rise during the last year. There is marginal increase in the health budget which will not meet the health care needs of the people as a minimum of 6% of the GDP is needed from the public spending to give basic minimum health care to all. No policy in employment generation and security of jobs has been defined. Agriculture section has not got the attention due to it. Decision to raise Rs. 30,000 crore through disinvestment is against the interest of the nation and the working people. statement was issued by Asstt. Secretary Dr Arun Mitra and City Secretary Ramesh Rattan.
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