Finance Minister has presented to the Parliament the Union Budget for the fiscal year 2013-14. The budget has come in the background of economic slow-down gripping the country since 2010. We should not forget that a critical economic situation has shaped on domestic as well as global level. The Finance Minister is grappling with country’s various economic and financial problems. He was eager to contain and limit the deficit to 4.8 per cent, which could be favourable for the market investors and the business sentiments. He has made no revision in the basic tax slabs, but only introduced a surcharge for those earning above Rs. 1 crore, construed as taxing the super rich, while he aimed at ‘higher growth’ that can bring inclusive and sustainable development.
Containment of the deficit for FY 2013 at 5.2% (against the projected 5.1%) and the resolve to limit it further to 4.8% for FY 2014 are noteworthy. This can be broadly favorable for both market investor as well as business sentiments, though immediate reactions from the financial markets have been negative. Planned expenditures have been cut by nearly 20% from that budgeted for FY 2013.The axe on planned expenditures is what seems to be giving the broader investor community some jitters – Planned expenditures in India’s budget broadly include discretionary expenditures which can increase the productive capacity of the economy – for instance, public infra spending, capital expenditure programs of public sector units or even capital expenditures in the agriculture sector such as strengthening irrigation facilities /dry land farming etc. The 10% increase in non-plan expenditure projected for FY 2014 appears optimistic and quite on the lower side if the track record on this front is any indication. The 3 critical areas of food, fertilizer and petroleum subsidies have not seen any determined attempts at long-term reduction.
In a weak economy, expenditure curtailment was possibly the only immediate strategy available for meeting the deficit targets .Having taken care of the immediate pressing needs, the FM seems to have had some leeway in projecting his revenue and expenditure estimates for FY 2014. Overall, a status quo kind of budget under challenging conditions, It is likely that the corporate business sector finds some marginal improvement in the overall operating climate in the months ahead though they will have to remain at heightened levels of preparedness for stiff challenges in both the financial and operating environment.
BJP and other opposition groups have criticized the budget for different reasons. CPI leader Gurudas Dasgupta called it a ‘lollypop election budget’ and asserted that all announcements are mere tokenism. Trinamool Congress MP Derek O’Brien said that election budgets are the ‘sweet nothings’ of politics. FM makes promises which he has no intention of keeping. BSP leader Mayawati also believes that there is nothing important in this budget and that all announcements made in it look to be in air. According to SP leader, Mulayam Singh Yadav, the budget is against the poor and farmers of the country. He declared that his party would oppose it in the parliament. BJP, the main opposition party in the parliament, slammed the Union Budget 203-14 and called it ‘unimaginative and dull’. It has nothing for the youth, women and poor people, it asserted. Sushma Swaraj said that it was a disappointing budget and the FM did not think about the common man and the farmers while framing the budget. Arun Jaitley called it verbose and without substance.
But on the positive side the Finance Minister will claim credit for a few innovations. With the mood of the country influenced by the growing attack on women, the finance minister announced a Nirbhaya fund for women empowerment in memory of the Delhi brave-heart, and announced an all women bank though many criticized the latter saying it is as if women cannot use the existing banks. Increased allocation is promised to key areas and also incentives for investments and savings, while containing the fiscal deficit to 4.8% of GDP. Keeping in mind the elections this year, also focus is turned on some populist measures. The FM announced allocations for the welfare of schedule caste and tribes, differently disabled and women related programmes. He said faced with huge fiscal deficit, he had no choice but to rationalize expenditure. He also announced India’s first all women bank as a public sector bank and announced allocation of Rs 1000 crore for initial capital.
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