I am not an economist, and I am not even an eminent Chartered Accountant, however, from the views of various experts on the subject, I would like to express my understanding on Budget – 2012 as follows:
We are all concerned at our growth story and few years back, many were discussing that India can achieve double digit growth and many developed countries in the world were referring to India very frequently and maintaining excellent relations. We have also heard President Obama referring India as ‘developed’ as against the notion that India is a ‘developing country’. As we know about our country, our potential and challenges, we have not taken that praise very seriously as I believe. In his presidential campaign also, Barrack Obama has very frequently referred developing nations and the competition from developing countries. We need to learn a lesson from Americans that even when they continue to be on top in many areas, they are very cautious as to what is happening around the world and concerned with their domination.
From the year 2009, we are discussing at the impact of economic slow-down in America on India and the crisis has expanded. There were efforts by the ‘developed nations in crisis’ to attract investment and we are opposing certain moves saying that it is ‘protectionism’ and against the spirit of globalization. We have also the reduction in FDI and out-flow of investment from India. The crisis has expanded and it has resulted in affecting the growth in developing nations. Due to all these developments, we have seen the rupee value going down making imports costly. Coupled with this economic slow-down, the events in middle-east etc. has made our oil imports costly than expected.
Amidst all these concerns and the criticism that the Government is not doing well to boost the growth, the Government did attempt to reduce the subsidies on Petrol and the Government has tried to allow FDI in ‘Multi-brand Retail’. But, the Government could not move forward due to opposition from various political parties and ours is a coalition Government at the centre. Even there was no complete consensus on GST and DTC despite the willingness of the Government to move forward with GST and DTC.
Concerns of the Industry:
Industry, of course, is very concerned at the slow-down and wanted the Government to take pro-active steps to boost the growth. Industry naturally wants massive investment in infrastructure and there is an argument of the industry that the amount spent on various welfare schemes can be reduced and the same can be used for infrastructure development which can provide jobs. Reportedly, the industry is upset with 2G issue and industry is saying that the India can not attract foreign investment as expected and there can be people from industry attacking the Government on many issues. Industry is arguing against subsidies having direct impact on ‘fiscal deficit’. Industry wants the Government to proceed with various reforms.
Concerns of the Common man:
Common man will also talk about growth and industrial development. But, the common man will certainly be concerned at inflation. Inflation has been an interesting topic of discussion and it seems that the Government could do little to contain the inflation. I have heard the Prime Minister once referring to the price rice in certain food articles that it has a direction relation to consumption. Then, it must be a sign of development.
Everyone is concerned at our Agriculture that it is not profitable. The Government has a tough job here that it has to ensure good price for product and at the same, it has a responsibility that no one is denied of food.
RBI has intervened and controlled the ‘money circulation’ in order to contain inflation and the industry is accusing that the RBI move has not delivered the intended result and on the other hand it is affecting the industry.
Many strongly feel that there should be an increase in spending on ‘Education’ and ‘Health’. But, it remains a serious issue and State Governments have a great responsibility that no one is denied of ‘Education’ and ‘Health’ and we need some radical reforms in this regard. State Governments should implement the Central Schemes well.
The Economic Survey report or the highlights read-out by our Finance Minister before introducing the budget is somewhat interesting. There is a forward movement in our industrial out-put and the survey gives us the hope that we can still move forward with the growth momentum. Finance Minister has said that the Economic Survey report is credible.
If what is opined in the Economic Survey report is credible, then, the Finance Minister has given a good budget. Because, there is no meaning for giving any further room for controversy and the stability of the Government is good for the industry in the light of Economic Survey projections. In that sense, with his experience, the Finance Minister has said that it is a ‘budget for stability’ and elaborated that he meant ‘stability in the economy’. But, the media was saying that the Finance Minister could have meant ‘political stability’. In reality, the ‘economic stability’ depends on ‘political stability’. In that sense he has done a good job for the time being though many decisions are to be taken in future.
Barring the change in ‘Income tax slabs’, increase in excise and service tax etc., in his speech, the Finance Minister has stressed on certain important issues like:
1. The Government can not afford to disturb the ‘Macro Economic Fundamentals’.
2. There will be an effort to contain subsidies to 2% of GDP etc.
3. ‘Fiscal Deficit’ will be looked into and efforts will continue to reduce the ‘Fiscal Deficit’.
Many are saying that the projection of the Finance Minster with regard to ‘Fiscal Deficit target’ is unrealistic and they are others saying that it is very much possible.
4. The Government has shown commitment that it is concerned at growth and has initiated few measures like raising bonds for infrastructure, allowing direct import of aviation fuel and extending the facility of ‘External Commercial Borrowing’ with a cap etc.
5. The Finance Minister has said that the Government is considering the proposal to allow FDI in Multi-Brand retail, FDI in aviation, DTC, GST etc.
6. Apart from the measures directed towards the industry though those are few, the Government has continued with its ‘inclusive growth’ agenda like MNREGA and providing for ‘Food Security Bill’ and many other measures.
7. The Government has stressed at the significance of Research & Development.
At the end of Budget presentation, I do strongly feel that the Finance Minister has done a very good job. We can not say that the people’s expectation is unreasonable and the Government itself indirectly agrees that it has the intent to do more, but, can not do in the given political scenario.
The Finance Minister has a tough job to do in the course as he is supposed to take certain measures through executive actions which may result in political overtones. The Prime Minister too says that the Government is ready to bite the bullet when it comes.
What I feel:
The understanding of budget can not be confined only to corporates, Chartered Accountants, Economists etc. and every citizen should understand the budget and related issues to the extent possible.
The media should be responsible and should educate the viewers and can even criticize the Government. But, where is the justification for picking-up ‘Vodafone issue’ and highlighting it even after some kind of clarification from Finance Minister. Why there is no such urgency and interest in looking into the ‘Adhar issue’ and as to how the Government can effectively ensure that the money spent on welfare-schemes reach the real beneficiary and as to how it can contain the ‘wastage’ in the course. We know that media is nothing but business, but, it is the responsibility of the media to work for the welfare of the people and work with good intent to the extent possible. Media is really creating a whole-mess in this country in the recent days and there will certainly be a ‘good discussion’ on the responsibilities of media soon. Good things are coming out of media by default and this is what many feel.
Country has not got benefited due to ‘Lokpal Movement’ and media gives live and continuous coverage on this issue. Lokpal can not curb corruption and infact, it can conceal corruption on one ground or other and can be used as a convenient tool to face the public anger and criticism. Instead, the media should have focused on systematic reforms and the media, during that ‘Lokpal movement’ time, has not allowed people to express their views as to how to deal with corruption.
We can not continue our growth story if we find people inside who can harm the country at the foreign initiative. We should not form any opinion instantly unless we understand the issues in the right perspective and the media has a great responsibility in building the nation.
Unless India is ruled by a single-party having numbers in both-houses, we will continue to be disappointed at the performance of the Government.
As against the strong opinion from economists that the ‘Fiscal Deficit’ is a big challenge, I don’t think that it can harm us and the country can face any situation if it is likely to go out of control. This is very well crystallized by our Finance Minister in an interview referring to our situation in the year 1991 and the subsequent reforms.
Let us hope for the best and let us make this country strong and let the growth be ‘inclusive’.
What I expect from the experts and the students:
I want the students and the experts to explain in brief and in a very interesting manner as to how the DTC is useful and will be a major reform.
I want the students and experts to explain as to why some states are not accepting GST, usefulness of GST in an understandable and simple manner.
Note: I am not an expert on the subject, do not have privilege of looking into issues in detail and just explained my understanding of issues in brief from the opinions expressed by many.