Mumbai (AsiaNews) - The much awaited budget after the poll victory of the Congress Party sticks to the promises made to the common man but deludes the expectations of the business community. The stock market shows it. The sensex plunged by 870 points (5.8%) –the sharpest ever after a Budget in both absolute and percentage terms. The Economic Survey in anticipation of the Budget advocated a big bang reforms, but Finance Minister Pranab Mukherjee chose instead to play the role of the common man handing out goodies to the individual taxpayers in the form of higher exemption and abolition of surcharge, hiking outlays on the social sector and refusing to take up needed reforms. Far from laying out a roadmap for disinvestment or privatization, Mukherjee spoke proudly of Indira Gandhi “wise and visionary” nationalization of banks four decades ago, which he said had ensured that India’s banking system didn’t go down with the West in the financial meltdown.
The reaction of the markets expressed its feeling of being let down. But there is hope that in a few days the markets will come back since personal tax relief will put more money in the hands of investors and consumers and higher government expenditure on infrastructures and rural housing will act as economic stimulus for industry.
The Budget provides for sharp jumps in spending on defense (24%) and internal security (31%) after the terrorist attacks in Mumbai and other Indian cities. Increase is foreseen also in allocation for education and health. Unfortunately education is still getting only 3.7% of the budget while defense in getting 16.3%.
There are also significant increases in spending on infrastructure like power and roads as well on social sector – employment generation, health, education, rural development.
Mukherjee, in an interview explained why this is not the right time for disinvestment of the state’s own industries. “There are things that should be done and there are things that can be done”. “My primary objective right now is to come back to high growth rate. My target is to touch a 7% GDP growth this year and take it to 8% and 9% thereafter. When external trade is in bad shape and revenues are going down, I am providing stimulus (through extra spending) to pull up growth domestically”.
In a move to pacify the BJP (Bharatiya Jnata Party) and other parties a proposal had been made to provide 100% deduction for computing income tax for donation to electoral trusts as a reform measure that will help transparent funding of parties in elections time.
The Times of India came out with the picture of a poor girl crying on the front page and with the title: (the budget) “It is for you and for her” with the explanation: “Our readers are the cream of the Indian society…but there is another India with which many of us have only passing acquaintance. It is an India of several hundred million people who barely make a few rupees a day… it is time we gave the other India hope of a better life. Budget must be as much about the girl in the picture as it is about us”.
