More on Budget
Every budget is a political statement. And the Modi-Jaitley maiden exercise for the remaining part of the financial year 2014-15 is no exception. It has been well received by the corporate lobby and big business controlled media. Prior to General Budget Railway Budget just revealed the policy orientation of the saffron brigade. Their swan song is development and reforms as it was the case with the Congress-led UPA government. But they look more ruthless in implementing reforms and margi-nalising the marginalised further.
The Indian Railways Budget is close to 10% of India’s central budget. The social service obligation of the budget stands at Rs 20,000 crore. The railways will earn Rs 1,64,374 crore through various resources and will spend Rs 1,49,176 crore in 2014-15. The operating ratio is expected to be 92.5%. A bullet train is being introduced between Mumbai and Ahmedabad, and high speed trains between metropolitan cities, that would cut travel time by half. The announcements covered new trains on pilgrimage routes, recruitment of women constables, augmentation of safety measures. Under a Fuel Adjustment Cost (FAC) formula, rail fares could be increased every six months. There is little scope for investments, to overhaul the 64,000 km route network, in terms of safety. Foreign Direct Investment (FDI) and Public-Private Partnerships would be sought in all areas. Except for 30 ‘‘strategic’’ projects, new rail projects are on virtual moratorium. And they call it pro-people budget!
Government of India’s ‘Economic Survey’ for 2013-14, forecast a GDP growth rate between 5.4% and 5.9%, in respect of fiscal 2014-15. But the GDP growth rate was actually 4.7% in 2013-14. Along with ‘judicious cuts’ in the subsidy regime, reforms are expected to be pushed further. Growth could still fall due to poor monsoons, dismal investment climate and ‘external environment’ of the internal wars in Syria and Iraq. There would be spurts in oil prices, detonating a chain reaction in Indian economy.
The 2014-15 Union General Budget proposes a rise in the tax exemption limit by Rs 50,000 for all individuals. There will be reduced prices for colour TV sets, personal computers and laptops, by doing away with additional duties. The Foreign Direct Investment (FDI) cap in the insurance sector is raised from 26% to 49%. The Rural Infrastructure Development Fund has been increased to Rs 25,000 crore and Rs 5000 crore allocated for the Warehouse Infrastructure Fund and Long Term Rural Credit Fund. Disinvestment target has been raised to Rs 58,245 crore, from selling stakes in PSUs and erstwhile government companies. The outlay for defence has been hiked by 12.43%, and the FDI in defence manufacturing sector increased to 49%. This is a matter of great concern for national security and sovereignty. Allocation for the education sector has increased marginally from Rs 79451 crore to Rs 82771 crore. Health care sector has a boost or 27% in allocation. The fiscal deficit target is of 4.1% which looks impossible.
In short they have tried to balance a budget with a hidden agenda to please overseas investors who want more opening, all in the name of reforms and development. And the Jaitleys are too willing to oblige them. So they have sent a message to overseas investors that after Railways and Defence, existing cap will be removed from other vital sectors.
Vol. 47, No. 3, Jul 27 - Aug 2, 2014