Itís status quoist, fails to inspire confidence
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This was the tenth and the last Budget of the UPA government. In the span of these 10 budgets, the growth rate has declined from over 8 per cent to 5 per cent, fiscal deficit has increased from a low of 2.5 per cent of the GDP to over 5 per cent, the current account deficit at 5.4 per cent is at an all-time high, inflation is stubborn, interest rates are high and back to the bad old days, investments are down and investor confidence in India and abroad is at its lowest.
The Budget was presented in this background and the least that was expected of the Finance Minister was that in this Budget he would unveil the steps which would revive confidence and create the environment for reclaiming the earlier high growth rate. Unfortunately, the Finance Minister has failed miserably to do so.
Just as the Railway Minister criticised his predecessor minister in his Budget speech, Sri Chidambaram has criticised his predecessor Sri Pranab Mukherjee, who now occupies Rashtrapati Bhavan, when he says "in the Budget for 2012-13, the estimate of plan expenditure was too ambitious and the estimate of non-plan expenditure was too conservative". It is the same government and the same Prime Minister, but he merely sits there and listens approvingly.
What an irony? The FM then proceeds to "rationalise" expenditure and in the process reduces the plan expenditure for the current year by over Rs 92,000 crore, capital expenditure by Rs 37,000 crore and claims to achieve a fiscal deficit of 5.2 per cent, better than the expected 5.3 per cent. It must, however, be noted that it is productive expenditure which has been drastically reduced which explains why the revenue deficit has gone up to 3.9 per cent in the revised estimate this year from 3.4 per cent estimated in the Budget. He has thus paid no attention to the quality of expenditure and reduced productive expenditure at random. There is no doubt that this massive reduction in expenditure will further dampen demand in the economy and definitely create short-term pain for everyone. The government clearly believes in the principle of 'heads I win and tails you lose'.
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