National

``The budget framed and packaged to deceive even the intelligent''

By S. Gurumurthy

The Swadeshi Jagaran Manch regards the budget for 2005-06 presented by the Finance Minister as the most deceptive work in recent times. Not only does the Budget consciously duck transparency, through the device of ornamental tax cuts and elegant words, it conceals the dangerous consequences of this deft exercise.

The most critical aspect in this year's budget is the drastic change in the fiscal relation between the Centre and the States on the recommendations of the Tenth Finance Commission. In a dark corner of his speech the Finance Minister has cleverly hidden his remark that the States and Union Territories have to borrow from the market Rs. 29,003 crores for financing their plans. By sleight of hand the Finance Minister has concealed the fact that this merely relieves the Centre of fiscal deficit of like amount. On a like-to-like basis the deficit of the Centre for the coming year ought to be higher by Rs. 29,003 crores! Mr. Chidambaram gets the credit for reducing taxes, yet keeping the deficit under check! But, the fine print of the budget papers, not the Minister's speech, shows that the Centre has cut its Plan provisions to the States/Union Territories, from Rs. 55,209 crores in the last budget to Rs. 30,454 crores in this — a reduction of Rs. 24,755 crores! A transparent budget-making would have highlighted this fact and also how the States/UTs would be `enabled to borrow from the market', as most of the States/UTs on their own cannot borrow from the market. Again the budget has cut scheme-specific Plan grants of Rs. 7,750 crores from the States and has used these funds for the Common Minimum Programme of the United Progressive Alliance. Another evidence of sleight of hand!

Again it has become an established practice with Mr. Chidambaram to inflate the tax receipts. Last year it was clear to the naked eye. The revised figures for 2004-05 confirmed that he had overrated the tax receipts by Rs. 13,695 crores. This year also he has assumed a rise of over 20% in tax receipts. Last year too he had assumed a similar figure, but got an increase of about 16%. There is no scope of rise beyond that this year also, given the tax cuts. A one per cent drop in anticipated rise means a short fall of Rs. 3,060 crores! A four per cent reduction would mean over Rs. 12,000 crores. This would mean again a further reduction in the transfer to States like in the previous year, when because of lower tax receipts the States got Rs. 3,610 crores less. The shortfall is certain, only the amount is uncertain. This budget almost certainly will drive many States/UTs to bankruptcy.

Again the Finance Minister has been unduly long on words and short on numbers. Why, the numbers are almost non-existent!

He has unveiled the Bharat Nirman vision without a single rupee as budget provision for it, even though on it rests his goal of 100 lakh rural jobs. He envisions to generate three crore jobs in the next five years, but not a word on how many this year! He is eloquent on the high cost Employment Guarantee Scheme, but simply says `money will be found', but not from where. He speaks of repairing water bodies throughout the country, but had provided Rs. 50 crores last year! And Rs. 100 crores this year! It is more like mocking the idea of water conservation than implementing it. There is no mention of river linking or other national mission on water, which is becoming the most serious problem of the nation. Announcements are endless. Micro irrigation for 15 million hectares 10 years from now, Bharat Nirman as a timeless pursuit — all in an annual financial statement. He has claimed that `infrastructure will continue to be funded through the budget'. But his budget schedules show that out of the investment of Rs. 1,18,462 crores for 2005-06, Rs. 1,00,868 crores, more than 85%, is from outside the budget!

In fact the budget papers themselves describe it as `Internal Extra Budget Receipts'. This is exclusively from the much-ridiculed public sector undertakings.

Without them there would be virtually no public investment at all in this country! Even out of this, nearly 50% represents PSU's borrowings. While Mr. Chidambaram takes credit for the investment in the budget statements, he conveniently omits to mention that the PSUs are borrowing for funding half of the investment of Rs. 1,00,868 crores. The list of prevarications to mislead is unending.

Yet he has got away with these and more for two reasons. First, he addressed his budget almost exclusively to the Dalal Street-conscious, Income Tax-sensitive sections of India for which cuts are the index of national good.

Second, no one reads the 1000-odd pages of finely-printed budget documents before expert-commenting minutes after the budget. The makers of the budget know that most `experts' comment on the budget by hearing the speech, not reading the voluminous find print. They know that a budget speech, which is well received, instantly on the TV and print media, is a substitute for reasoned debate. That is how this budget has deceived even the intelligent. Another clever move of the UPA Government was to announce the hiking of FDI limits for Telecom and construction sectors ahead of the budget and avoiding the announcement of FDI schemes for Trade, Mining and Pensions, which will have risky consequences for the country. He has succeeded in packaging the budget for the articulate Indian.

But there are some welcome features in the budget. Of them two are important.

The Gold Units scheme is a good idea, as it recognises that, for an Indian, gold is not a consumption item, but an investment portfolio. But this idea has to be backed by a gold-friendly tax regime since the gold economy is mostly black. The idea of employing micro finance institutions as intermediaries to retail-lend bank funds is again an idea that again recognises the Indian differential.

(The writer is All-Bharat Co-Convener, Swadeshi Jagaran Manch)

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