Referringto Chidambaram's maiden budget, almost all national dailies carried banner headlines expressing satisfaction that Chidambaram carries forward Manmohan's reforms. For us too, this goes without saying. But the new budget, in certain respects, marks a directional change. That is, change for the worse. Though the earlier budgets have been diluting the role of the state in the economy, this perhaps is the first liberalisation era budget that marks the total abdication of the state from infrastructural and agricultural development. Sounds totally contrary to the official claims, isn't it? But it is true. Public investment in agriculture and infrastructure, that is flow of hard cash from the public kitty into these areas, has given way to state promoting financial institutions which are supposed to raise funds from the market to lend money to farmers and infrastructural projects in private sector. It is not just change in the method of investment. It marks a macro-economic shift. Public investment, be it in any area, has a strong influence on growth and the level of private investment. Leaving investment in infrastructure and agriculture to market forces may still be passed off as a major budgetary thrust as part of the economic double-speak. But this inevitably puts a question mark over the claimed projection of 7% GDP growth over the next 7 years.
The implications of borrowing at market rates and financing investment in these areas also cast a shadow of uncertainty over the rate of expansion of investment and growth in agriculture and infrastructure. Private promoters, borrowing at market rates, cannot but be very selective in taking up infrastructure projects. Likewise, rich farmers and relatively developed areas alone will have the access to credit and the present arteries financing small and medium farmers will get choked. The United Front has promised to double the credit flows to agriculture in its Common Minimum Programme (CMP) but Mr. Chidambaram has now passed the buck to NABARD. The voters cannot ask the Chairman of NABARD, who is answerable neither to the Parliament nor to the people, why this is not happening?
United Front's biggest claim is that this budget breaks new grounds on basic minimum services with the proposed higher allocation of Rs.2,466 crores. As a sequel to CMP, the UF government convened a Chief Ministers' conference and identified 7 thrust areas as the basic minimum services. Leave alone the fact that even after 49 years since independence these basic needs of the masses have been only marginally met and even the 49th budget in independent India cannot allocate more than slightly over 1% of the total allocation to these burning needs of the millions. Even assuming that this whole money is to be spent on each of these minimum needs, covering the entire rural poor of the country under the public distribution system (PDS) will need 15 times more money; providing primary health centre (PHC) coverage to all rural people will take 20 more budgets like this; pucca houses for all will take 50 more budgets; and even 100 such budgets will not be able to provide connectivity through good tarred roads to all the villages and hamlets.
Those programmatists who would dismiss such objections as these as ultra-left and would be happy at the absolute size of the increase in allocations should also be on guard. There is a caveat in Chidambaram's budget speech when he qualified this budget proposal with the statement that the Planning Commission would work out the details of this higher allocation. One clearly does not know yet whether this Rs.2,466 crores represents a net increase. This is so because fraudulence has been raised to the level of fine art in budget-making in these days of liberalisation. We have seen how Manmohan Singh amalgamated several existing schemes to offer 'higher allocations' under Jawahar Rojgar Yojana (JRY). Nonetheless, some more funds are bound to go to the states.
The informed opinion is, however, aware that this is more of a Centre-State resource sharing exercise and not as much of a basic needs initiative. In the CMs conference, Deve Gauda promised to increase the allocations to the areas by 15%. But Chidambaram, in his budget speech, has gone back on CMP promise by refusing to transfer the centrally-sponsored schemes to the states. The states will have to remain content with some more money - Rs.100 crores to a state on an average. Whether this money would be sufficient enough to grease the cracking federal machinery and how much of this would go to line up the pockets of the politician-bureaucrat nexus is anybody's guess. Rao-Manmohan's populist exercise on employment and housing did not cut much ice with the electorate. It is also a moot question how far the novelty of this basic minimum services will exert an impact, especially in view of the peanut-sized funds involved. Putting aside the comparative politics, one need not be surprised if Congress starts claiming, based on comparative budgetary arithmetic, that UF is less pro-poor than Congress and Chidambaram less popular than Manmohan.
The list for automatic approvals for foreign direct investment (FDI) areas has been expanded. But not a word has come from Chidambaram in line with the postures of UF, especially CPI and CPI(M), regarding discouraging FDI in non-priority areas through suitable fiscal measures. Of course, as the saying goes, beggars cannot be choosers, more so if they are overzealous in their act of begging.
True, the budget is a lacklustre one. But how wrong is it to call it a please-all budget! It definitely does not offer everything to everybody. Rather, within its limited scope, it is clearly a kulak budget. Compare Rs.1,500 crore additional allocation for fertiliser subsidy and the largesse for farm mechanisation with the meagre Rs.300 crore increase for food subsidy, its class character will be clear. The perfect balance that Chidambaram has achieved is not between the Left and the rest. Rather, it is between kulaks and the industry. The corporate surcharge has been slashed by half despite high growth and booming profits in the corporate sector in the last two years. Chidambaram hasn't touched the excise much. His revenue-conservatism clearly bears a pro-big bourgeois imprint. But for the second year running there is no budgetary support to sick public sector units (PSU), not even to launch a new voluntary retirement scheme (VRS).
On the eve of the budget, there was a loud protest from CPI(M) Polit Bureau that the left parties have not been consulted on the budget and Chidambaram has steered clear of the UF Steering Committee which has however never met to formulate directives for budget making. But appearing before the TV cameras, Somnath Chatterjee, the industry-friendly leader of the CPI(M)'s parliamentary party offered unqualified praise for this ex-Congressman's Congress style budget, calling it pro-poor and progressive. Not a critical word has since been heard from CPI(M) on the budget. Is there anybody still left at the top in CPI(M) leadership with political self-respect?
-BS.