By Dr.Chinglen Maisnam
IMPHAL, March 17: First let me make general comment on the Union Budget 2012-13 which has received little attention in a state like Manipur.
The Budget comes at a time when UPA II Government has been accused of turning a blind eye to mega-corruption and black money and doing little to counter hyperinflation that hit the people and rising regional divide.
What are the main issues that matter to the ordinary people today? The rampant inflation which is eroding real incomes very sharply and making it difficult for households to make ends meet.
The difficulty in finding productive and secure employment that provide adequate livelihood. Pitiable state of affairs in supply of some essential public services which force people to use expensive and often inadequate private providers. Poor physical infrastructure and even worse conditions of maintenance of such infrastructure.
The Union budget ,however, fails to address such a serious problems affecting the people and the economy in pursuit of aggressive neo-liberal policies. Finance Minister in his budget address said “We are about to enter the first year of the Twelfth Five Year Plan which aims at “faster, sustainable and more inclusive growth.”
Here also the budget lacks seriousness in addressing the issue of inclusive human development which has emerged as one of the biggest immediate social problem in the country today.
Though India is moving towards high growth trajectory, it cannot convert the income gain into human development.
The Centre`s “aggressive neo-liberal” character found reflection in Finance Minister’s remarks on subsidies. “It would be my endeavour to restrict the expenditure on Central subsidies to under 2 per cent of GDP in 2012-13. Over the next three years, it would be further brought down to 1.75 per cent of GDP”. Justifying the proposal, he observes “Some subsidies at this juncture in our development are inevitable. But they become undesirable if they compromise the macroeconomic fundamentals of the economy”. All these indicated the government`s lack of willingness to devoid from the quest for fiscal rectitude. It lacks seriousness in addressing the issue of inclusiveness.On the issue of infrastructure the Budget promises to increase investment in infrastructure to 50 lakh crore.
But half of this is expected to come from private sector. But no private capital, foreign or domestic, will come in when there is no disposable income in the domestic market.
The problem of infrastructure, which has emerged as the biggest immediate economic problem in the country today is not seriously addressed in the budget. Despite problems in agriculture growth, the budget provisions had been insufficient and that the allocations for the welfare of women, minorities and tribals were thoroughly inadequate.
The Central focus of the Union Budget 2012-13 revolves around the expenditure cut- deflationary policy. The Union Budget still carries forward neo-liberal policies. It does not devoid of “aggressive reform”.. The tax-GDP ratio, which had reached almost 12% in 2007-08, has declined since then to around 10.6 per cent in the current Budget. At a time when income inequalities are rising fast, a decline in tax GDP ratio shows the waning commitment towards redistributive policies and a throwback to trickle-down economics. With resource mobilization taking a back seat, Plan Expenditure as percentage of GDP in 2012-13 has not increased significantly from what was spent in the previous fiscals. The total expenditure for 2012-13 is budgeted at 14, 90,925 crore. Of this, the Plan Expenditure for 2012-13 is 5, 21,025 crore. The Non Plan Expenditure for 2012-13 is budgeted at 9, 69,900 crore. Thus, major chunk of the expenditure goes to non-plan. Such squeeze in real expenditure marks all the major developmental heads. The Budget is proposing to mobilise a net revenue amount of Rs. 45,940 crore through indirect taxes, which will inevitably be passed on to the consumers. This is a regressive taxation regime, which enriches the rich while burdening the ordinary citizensNo concrete steps to unearth the huge sums of black money stashed in offshore tax havens were announced. The 82 DTAA (Double Taxation Avoidance Agreement) is the biggest conduit of tax evasion by MNCs and Indian corporates. Rather than plugging such channels, the Finance Minister is signing more tax avoidance treaties with other countries.
It is to be mentioned here that the North Eastern region depends on central funding for many of its basic needs and also for development works. The state governments of the region depend heavily on the central assistance and thus efforts to create economic and physical infrastructure by the states themselves are inadequate. Finance Minister Pranab Mukherjee announced nothing specific about North Eastern region. The north east has been neglected once again in the budget. Nothing has been done to reduce the multi prong deficits of the region including unsustainable fiscal crisis. Budgetary allocations will hardly reach yhe region.
To sum up,the argument underlying the budget appears to be the reduction in the revenue and fiscal deficits relative to the GDP. It has to be achieved however not through additional resource mobilization but through a restriction on government expenditure relative to GDP. These measures undoubtedly carry the neo-liberal agenda forward; the deflationary nature of the Budget is a warning sign of this.