The Budget would have been the perfect vehicle to introduce some bold initiatives.
That opportunity has been lost through this Budget, observes Shreekant Sambrani.
A Budget commentary can follow two, not mutually exclusive, approaches: Subjecting the numbers to reality checks and parsing them for consistency and accuracy, or analysing the proposed measures for their relevance and consequences.
This columnist has always been more inclined towards the latter, because as we have seen time and again, the numbers can be subject to accounting legerdemain, and interpreted according to one’s convenience.
No Budget is free of such finesses, and despite professing transparency, Finance Minister Nirmala Sitharaman’s speech had clear instances of this kind.
Her allusion to the coronavirus stimulus in the current year being 13 per cent of the GDP is one such.
By every yardstick, the net additional stimulus by the government (over and above earlier budged provisions and the quantum provided by the Reserve Bank of India) was in the region of 1 to 2 per cent of the GDP.
Be that as it may, since taking such liberties is now a well-accepted practice.
The Budget has come at a less fraught point of time than was anticipated.
The virus infection numbers are dramatically lower now than they were a few months ago, leading many impartial experts to believe that India may have passed the peak.
India is also assured of adequate and reliable supply of vaccines enabling the government to launch an ambitious programme of mass inoculations.
And best of all, the economy is showing signs of robust revival, which is also reflected in surging tax collections.
All these have created an atmosphere of quiet confidence on part of the government notwithstanding the Mexican stand-off on the farmers’ prolonged agitation and siege of Delhi.
That was reflected in the Budget.
The finance minister spent a fair amount of time at the start of her speech on self-congratulations and incantations of the aatmanirbharta mantra.
She did not lose any composure while she announced that the fiscal deficit for the year 2020-2021 would be a massive 9.5 per cent of the GDP and that for the next year would be 6.8 per cent.
Such assertions would have, in normal times, sent the minister stating this scurrying for cover.
She also did not propose levying any COVID cess, which was widely anticipated, much to everyone’s relief, especially the commentariat.
Some Budget measures should be welcomed without reservations.
The capital expenditure is proposed to be raised to Rs 5.5 trillion from Rs 4.1 trillion of the previous year, an amount higher by one-third again.
The proposed new institutions for stressed asset management and restructuring would be the beginning of what is popularly referred to as Bad Bank, much needed for restoring financial institutions to some semblance of health.
Moves to monetise idle assets of the government and public sector companies — mainly prime land — have been long overdue and could augment the government coffers very nicely.
A much more comprehensive statement about disinvestment in both strategic and non-strategic public centre enterprises, as well as advice to states to do the same for their own public sector companies also falls in the same category.
The expectation is that the government will realise Rs 1.75 trillion, or 5 per cent of the proposed expenditure of over Rs 34 trillion.
This columnist will not at this stage enter arguments such as we have heard this before and the real test is actual numbers.
The boldly stated intent is welcome, especially when the government is daily subjected to a barrage of criticism of being overly business-friendly, even nurturing crony capitalism.
The first pillar of the Budget as designated by the finance minister was health and sanitation.
Yet it is not clear if the measures announced, such as the creation of more rural and urban primary health and wellness centres, or critical care centres, would, by themselves, lead to dramatic improvements in the health and sanitation status of the country.
The piped water scheme is a pet project of the second NDA government and expectedly, it received a substantial allocation of Rs 2.7 trillion over the next four years.
It remains to be seen whether creating the physical infrastructure of pipes and tanks would actually bring clean and potable water sufficient to quench the thirst of our burgeoning towns and cities.
Ms Sitharaman also announced a slew of simplifications to streamline taxation matters, which, if fully carried out, would help improve compliance.
That by itself would generate a substantial quantum of tax revenues, as she herself observed, was the case with both direct taxes and especially, GST.
All of these, by and large, add up to good housekeeping practices in this columnist’s opinion.
And there is nothing wrong with it either.
I have long argued that any budget, even that of the central government of a country, is basically an accounting and auditing exercise, a statement of receipts and expenditures of the government for the coming year and a review of what happened in the previous year.
In that sense, Budgets ought to be seen as rather dry and dull exercises, of interest primarily to accountants and economists, but of little interest to ordinary citizenry.
But we in independent India have seen our Budgets in an entirely different light.
For the first four decades, a period of shortages and ever more stringent government controls on all economic activities, Budgets were anxiously awaited for what they would tax next, leading to hoarding and artificial shortages not just essentials but also such items as razor blades.
Since the 1990s, successive governments have used Budgets to announce their policy priorities.
A veritable industry of Budget watchers and commentators has thrived in this atmosphere, with post-Budget analyses fiercely competing for viewer and reader eyeballs.
In that context, the current Budget has to be termed a somewhat more routine exercise.
That said, I must enter a caveat.
The past year was no ordinary year.
The COVID crisis was the worst shock in more than a century to all economies across the world barring none.
The government revenue-expenditure arithmetic turned topsy-turvy with the pressing need for emergency relief and virus containment expenditure.
Catastrophic business failures and job losses in the wake of lockdowns and restrictions became the norm everywhere.
World trade shrank, and globalisation, already in retreat for several years, became something of a curse.
Economic nationalism became the defining trait of most countries, including in matters such as sharing the new vaccines.
India was no exception to this.
One need not repeat here all the economic woes – contraction of the economy, job losses, plight of migrant workers and so on.
Many of the structural and institutional weaknesses of the Indian economy stared us in the face: poor labour productivity, abysmal state of health and education facilities, inadequate infrastructure, inefficient logistics, bewildering array of administrative and regulatory practices, growing chasm between the town and the country and the haves and the have-nots, all became painfully evident in the year.
One would have been right, therefore, in expecting that the government would use this unprecedented crisis as an opportunity to try and address systematically as many of these shortcomings as possible, especially since the somewhat upbeat atmosphere of the last several months had given it much needed breathing space.
The Budget would have been the perfect vehicle to introduce some bold initiatives.
That these would attract criticism from Opposition parties should not have deterred the government.
That would happen anyway, even with a workman-like going-on-as-before Budget.
And this government has not shied away from taking extremely controversial decisions in the face of stiff political and popular opposition.
That opportunity has been lost through this Budget.
The prime minister said it was the next in the series of mini-Budgets presented since the onset of the pandemic (the finance minister dutifully repeated this).
Tinkering is fine if the machine is purring along fine, with only an occasional sputter.
We have instead a machine where breakdown is the norm and smooth running is the exception.
Good housekeeping is a must at all times, but what was needed now was rearranging, if not actually redesigning, the house.
- BUDGET 2021
Feature Presentation: Aslam Hunani/Rediff.com
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