Vote-on-Account 2014-15
Keeps UPA flag flying ahead of polls, rustles headache for next govt
Debobrat Ghose
Desperate times call for desperate measures. Probably keeping with this adage, Finance Minister P Chidambaram grabbed the last opportunity with the recently-presented vote-on-account to appease voters. He announced cut in excise duties on automobiles and consumer goods, as also a few sops for defence pensioners and relief on old education loans.
As it is said, ‘Lie, damn lie and statistics’, the FM has tried to showcase the 10-year achievements of the UPA government by juggling numbers, which otherwise tell a different story when seen from the ground. What a bigger lie can there be, when on one hand the FM claims that UPA-II exceeded India’s long-term growth trend by averaging 6.6 per cent, on the other hand the food inflation has repeatedly gone up over the last nine years, touching double-digits. The average rate of inflation on the basis of consumer price index remained at 10 per cent. He concealed the fact that the GDP growth has fallen below 5 per cent for two successive years for the first time in three decades; probably to show that the UPA’s performance is better than that of the NDA regime.
“India’s food output is growing twice as fast as its population… Food inflation is still the main worry,” the FM said in his interim budget speech. But, he has cleverly projected a massive 18 per cent rise in tax revenues for 2014-15, which is far above the projected growth-plus-inflation projections for the economy. Through this, Chidambaram has made it essential for the next government to raise taxes sharply to finance capital expenditure to boost growth, which undoubtedly is going to be a headache for the successor of UPA-II.
“The targeted fiscal consolidation would be difficult to come by in Financial Year 2015 and leaves considerable burden on the next government,” analysts say.
Facing a slow growth to a 10-year low of 4.9 per cent, the FM mentioned 10 pending tasks for the next government – fiscal consolidation, Current Account Deficit, price stability and growth, financial sector reforms, infrastructure, manufacturing, subsidies, urbanisation, skill development and sharing responsibility, claiming that these would spur the economy to a growth trajectory of 7-8 per cent.
No change has been made in direct taxes. “Interim Budget appears to be the score card of UPA-I & II claiming ‘all is well’ in the economy. It also shows that the Congress has used the stage to present its future promises and past achievements,” said Chartered Accountant Abhishek Aneja.
“Usually, the rates of taxes are kept unchanged in the vote-on-account as it is left on the future government, which presents a full budget after the elections. But, the FM has reduced the excise duties on cars and other items, primarily to woo young voters,” the tax consultant added.
Refuting any ‘policy paralysis’, the FM said the government failed to get key bills on insurance, direct taxes, goods and service taxes enacted.
Keeping an eye on the forthcoming general elections, Chidambaram made a desperate attempt to reach out to minorities by increasing allocation to minority commission ministry by 12 per cent to Rs 3511 crore. He didn’t miss the opportunity to remind the House by listing the steps the UPA had taken to improve the condition of the minorities through government schemes, increasing literacy rate among Muslims, etc.
Instead of the aam aadmi, he announced sops for the manufacturers – the corporate sector, notably in automobile, capital goods and mobile handsets. If on one hand two-wheelers, cars, mobile phones, consumer electronics and appliances are set to get cheaper, the manufacturers too will largely be benefitted. How much a consumer really gets benefitted from this announcement, only time will tell.
As part of his populism, he announced two minor concessions – relief to 9 lakh students for old student loans (in a bid to woo 33 per cent youth voters) and to defence personnel, where the one-rank, one-pension (OROP) norm will be implemented.
According to analysts and ex-servicemen, the UPA government has been fighting against the OROP principle for the last five years, and the delayed announcement comes at a time when it’s not in a position to implement the decision. “I welcome the decision on OROP for our servicemen. Belated wisdom finally dawns on our ‘hard working UPA ministers,” Gujarat chief minister and BJP PM candidate Narendra Modi tweeted.
“The government dragged its feet for years on the issue but when it realised the BJP was committed to OROP, it gave its consent today,” the BJP president Rajnath Singh remarked after the budget.
In a bid to reduce fiscal deficit, the budget paid scant attention to social sector needs. Those working in the social sector have accused the UPA government and Chidambaram for denying funds to them. “The budget has ignored the basic human needs of the poorest and the most destitute in the country. The government didn’t even think about increasing the miserly amount of Rs 200 per month towards old age pension,” a social activist said.
The impact of Modi’s whirlwind campaigning and growing popularity among the masses was apparent in the budget speech. Without naming Modi’s jibe that the country was run with hard work and not from the Harvard University, Chidambaram said, “I may add among other mentors, my mother and Harvard taught me the value of hard work”.
In a statement, the CPI (M) politburo said, “The FM’s speech was more a political statement aimed at the elections rather than an effort to overcome challenges faced by the Indian economy.”
(The writer is Delhi-based journalist who writes on various national issues, and specialises on Madhya Pradesh and Chhattisgarh)
Narendra Modi (on Twitter): FM eats up plan exp, rolls over Rs 35,000 cr subsidies to next year to contain fiscal deficit even as non-plan exp overshoots! Real hard work! ‘Hard working’ FM also joins other illustrious UPA ministers who are seeking refuge in history to judge their ‘performance’.
Arun Jaitley: It’s hardly a budget. It was intended to be a vote-on-account for four months. He started by making a farewell speech, but he ended up making an election speech.
D Raja, CPI Leader: Don’t read much into the interim budget. Just before the polls, they have to justify things and they have to blow up certain things.
Rajiv Kumar, Senior Fellow, Centre for Policy Research: It was a very disappointing budget as the FM didn’t accept the fact that the economy is in a mess. Rather, he gave out a 10-point charter, which is easy to preach.
FICCI: While industry expectations were limited from an interim budget formality, the emphasis laid on turning around the growth trajectory and reviving the manufacturing sector in particular are well received.
CII: The vision presented in the Budget is very much in line with what CII believes in. The FM has highlighted the importance of the manufacturing sector, which is key to reviving the economy.
ASSOCHAM: Despite being low on expectations in an election year, the interim budget has given a pleasant surprise at least partly to the manufacturing sector which has been bleeding.
Interim Railway Budget violates Rules and Conventions—Ram Naik
Railway Minister committed a blunder by violating Parliamentary rules and conventions in his speech, said former Union Minister of State for Railways (Independent Charge) Ram Naik.
As per rules no new services or projects are included in the vote-on-account. However, the Railway Minister has clearly flaunted these Parliamentary rules and conventions. Since prior sanction of the cabinet is obtained before presenting vote-on-account in the parliament; not only the Railway Minister but the Prime Minister Dr Manmohan Singh and his entire cabinet is responsible for this deliberate breach,” said Shri Naik.
“Under the title ‘New Services’ 17 premium trains, 38 express trains, 10 passenger trains, 7 Memu-Demu trains and 6 extendent trains are included in this vote-on-account alongwith surveys for 19 new lines and 5 double lines. These announcements not only violate the rules but are meant for appeasement as General Elections are at the doorsteps,” criticised Shri Naik.
Disappointing for all—BMS
The Bharatiya Mazadoor Sangh (bms) described the interim budget as a tool to attract the voters during the forthcoming elections, which may increase the tax burden after the polls. The country’s largest labour organisation said there is no direct relief for labour, farmer and common man in the budget.
“Only one crore employment in last 10 years means only 10 lakh employment was provided every year, while the rate of unemployment is approximately to the tune of 20 lakh every year. Similarly, the fund allotment of Rs 1,000 crore for Skill Development and Rs 100 crore only for technology development are very low. Declining trend in manufacturing and mining is very serious. This will directly affect both employment and production. The Budget deficit– 4.6 per cent has not been improved since last several years. Increase in FDI, in Telecom and Aviation sector will lead more and more privatisation, retrenchment and unemployment. It will directly affect our National security. Budget allocation for Rural Development to the tune of Rs 8,22,02 crore seem to have gone on decreasing trends. No Tax Relief – on many consumer goods like LPG, Housing material, Diesel, Petrol etc,” the BMS said in a statement issued on February 17.
