Cover Story: BALANCING ACT
Union Budget 2014-2015 |
The budget 2014-15 was caught up between high hopes and hard decisions. Finance Minister in his budget speech said, “The prevailing economic situation presents a great challenge. It calls for a conscious choice to be made by all of us. Should we allow this drift to carry on and watch helplessly? Should we allow our future to suffer because of our indecisiveness? Should we be victims of mere populism or wasteful expenditure?”. In such a challenging situation instead of going for Big Bang changes, Arun Jaitely has opted for a Balancing Act between Ensuring Growth & Controlling Inflation, Industry & Agriculture, Populism & Pragmatism, Urbanisation & Rural Development, encouraging Indigenous Entrepreneurship and creating Conducive Environment for Investment in select sectors. While retaining the Stamp Modi of addressing high aspirations, Finance Minister has cleverly played within the limitations of the fiscal restraint. Therefore, despite divergent views about presentation, details and specificities, all over budget is positively received.
The maiden budget of the new NDA government presented on Thursday bears the stamp of Modinomics, because the announcements made by the Finance Minister Arun Jaitley were in line with the vision and promises made by Prime Minister Narendra Modi during his election campaign.
“The Budget will give an impetus to Jan Bhagidari (people’s participation) and Jan Shakti (people’s power),” said Narendra Modi after the Budget.
Budget 2014: Highlights
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Similar to the Trinity of Brahma (The Creator), Vishnu (The Preserver), and Shiva (The Destroyer) that play an all encompassing role in balancing the Shrishti (Universe), the Union Budget 2014-15 makes a fervent pitch for attaining a balance by creating growth, preserving an ideal level of deficit, and destroying (supply side) inflation.
Bitter Pills
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In his maiden Budget speech Jaitley said that, India had a strong urge to grow and free itself from the curse of poverty. “The people are in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance. The Indian economy will have to maneuver its way through a sluggish global recovery.”
He said that the government intended to usher in a policy regime that would bring the desired growth, lower inflation, sustained level of external sector balance and prudent policy stance. The FM pointed out that the present economic situation presented a challenge of slow growth in manufacturing, infrastructure and there was a need to introduce fiscal prudence. “The tax to GDP ratio must be improved and non-tax revenues increased”. He has set a target of fiscal deficit of 3.6% for 2015-16 and 3% for 2016-17.
Finance Minister Arun Jaitley: The task before me is very challenging because we need to revive growth, particularly in manufacturing and infrastructure to raise adequate resources for our developmental needs…We need to introduce fiscal prudence that will lead to fiscal consolidation and discipline. We cannot leave behind a legacy of debt for our future generations. There is an urgent need to generate more resources to fuel the economy. Prime Minister Narendra Modi: Since we formed the Government there were discussions about whether this Government can free the nation from crisis but the Railway Budget and today’s General Budget show that we are moving in the right direction. FICCI President Sidharth Birla: Through this budget the Finance Minister has set the ground for repair of the economy. There has been a mix of both short term and long term measures geared towards boosting confidence of all key constituents. |
The FM has retained the targets of tax collection at the level of the interim budget presented in February. Proposals have been made with a view to introduce measures to revive the economy, promote investment in manufacturing sector and rationalize tax provisions so as to reduce litigation as well as to address the problem of inverted duty structure in certain areas. In addition, some relief is proposed to individual taxpayers and to certain sectors of the economy.
Opposition ReactsSonia Gandhi: There is nothing new, they have merely continued our schemes. Sharad Pawar: It is a disappointment, rain of announcements, bunch of words and, lastly, insufficient fuel supply to engine of growth. Lalu Prasad Yadav: All sections of society have been cheated. Where is the BJP's slogan of 'Swadeshi' now?,
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“The UPA government didn’t increase the tax exemption limits for a long time. This budget has not only made a block buster increase in I-T exemption limit, but also for investments in PPF, LIC, NSC (eligible under Section 80C)etc. and for people paying interest on self occupied house property. This will benefit all tax payers, especially the middle class households,” said Chartered Accountant Abhishek Aneja.
CHEAPER
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COSTLIER
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There has been a mix of both short term and long term measures geared towards boosting confidence of all key constituents, which is an attempt to improve the present economic health of the nation.
One of the key priorities has been to see a clear course of action to end tax adventurism. The government has tried to address this by promising not to change any of the tax provisions retrospectively which creates a fresh liability and committing to provide a stable and predictable taxation regime that would be investor friendly and spur growth. However, FM announced the creation of a high-level committee to scrutinise any new case based on the retrospective amendments of 2012 in direct transfers, to avoid further litigation.
In a bid to tackle food inflation, the FM proposed setting up of a Price Stabilisation Fund and a commitment by Centre to work closely with States to re-orient their respective APMCs to provide for establishment of private market yards, along with the introduction of soil health cards, setting up of agri-tech infrastructure fund, launch of a technology driven second green revolution including ‘protein revolution’ and greater focus on irrigation.
Special emphasis has been given on entrepreneurship and skill development for which Skill India initiative has been proposed to be launched. “PM in his pre-poll speeches emphasized on this, and if implemented properly, it would help in doing away with unemployment in a big way and spur growth,” Aneja added.
The budget has given an indication that the government will promote FDI selectively in sectors – 49% in defence and insurance sectors, with full Indian management and control. Keeping with the Basel III norms, Rs 2.40 lakh crore will be infused in the Indian banking system, and the citizens would be allowed direct share holding in these banks. The government will also provide tax incentives for real estate and investment trusts.
While contesting from Varanasi, Modi had promised the electorate that if BJP came to power, it would take up the cause of cleaning river Ganga and ameliorate the condition of the weavers – the majority of which are Muslims. The budget has earmarked Rs 2037 crore for a new integrated project – Namami Ganga, and announced a handloom facilitation centre at Varanasi.
Following BJP’s priority to North East states, special emphasis has been given to infrastructure building, sports and overall development with provisioning of Rs 53,706 crore.
For the first time, the budget has special provisions for displaced Kashmiri migrants, which reflects the Modi government’s approach towards J&K issue.
Out of the total budgeted expenditure, Rs 98,030 crore will go towards women welfare and Rs 81,075 crore to child welfare. The total expenditure is estimated at Rs 17,94,892 crore.
-Debobrat Ghose (The writer is a Delhi-based journalist, who writes on various national issues).
Defence
The announcement of a War Memorial and Museum at Princes Park, near India Gate, and contribution of Rs 1000 crores towards ‘One Rank One Pension’, will fulfill long cherished dream of large number of ex-servicemen. |
Trade & Industry
It is a growth oriented and balanced budget. For industry it is a win win situation. There is booty for all sectors |
Agriculture
Much has been declared for agriculture, but I feel it does not contribute in enhancing the income of farmers, which should be on top of any government. If we enhance their income, it helps in arresting many problems at a time. Something more should have been done for agriculture, |
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Education
Welcome promises for both higher and elementary education. Teachers Training Programme after Pandit Madan Mohan Malviya may prove to be a milestone. Equally, the proposals to set up 5 new IIMs, 5 IITs, 12 more Government Medical colleges, four more AIIMS, etc. are good proposals. The allocations for Sarva Shiksha Abhiyan and Rashtriya Madhyamik Shiksha Abhiyan are also good. All these proposals are expected to take the education sector of the country to new heights. |
Energy and Environment
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Women
Since education is the most effective tool to make women self-reliant, the announcement of ‘Beti Bachoa, Beti Padhao’ scheme by Modi government is a welcome step. As far as security is concerned, it is not possible until we change the mentality of the people in the society. Overall the budget is farsighted. Price rise is a temporary issue. In long term the budget will prove beneficial for the entire country. |
Announcement for setting up more AIIMS and Medical College is a welcome step. But I feel India today needs more attention on primary healthcare. It should be a joint effort of the Centre State and should be taken up as a Mission like we have Rural Health Mission, etc. If we are able to ensure primary health to the people at their door steps the burden on big institutions like AIIMS will automatically reduce. |
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