This was the tenth and the last budget of the UPA government. In the span of these 10 budgets, growth rate has declined from more than 8% to 5%, fiscal deficit has increased from 2.5% of the GDP to more than 5%, the current account deficit at 5.4% is at an all-time high, inflation is stubborn, interest rates are high, and back to the bad old days, investments are down and investor confidence in India and abroad is at its lowest.
The budget was presented in this background and the least the finance minister could do was unveil steps to revive confidence and create an environment to reclaim high growth rate. Unfortunately, the finance minister failed miserably.
The FM reduced the plan expenditure for the current year by more than Rs. 92,000 crore, capital expenditure by Rs. 37,000 crore and claims to achieve a fiscal deficit of 5.2%, better than the expected 5.3%.
It must, however, be noted that it is productive expenditure that has been drastically reduced which explains why the revenue deficit has gone up to 3.9% in the revised estimates (RE) this year from 3.4% estimated in the budget. He has thus paid no attention to the quality of expenditure and reduced productive expenditure at random.
In view of the fact that savings have declined in the last five years from 37% of the GDP to less than 30%, the FM should have taken more determined steps to encourage savings by giving concrete concessions in income-tax to savers.
Infrastructure has received mere lip service. The problem in infrastructure is of clearances and other administrative bottlenecks, not finance. He has kept quiet about removal of bottlenecks.
So, all infrastructure projects such as national highways, telecom, ports and roads will continue to languish and so will critical sectors like power and civil aviation.
The food security bill allocation of Rs. 10,000 crore is a pittance. Everyone knows that the annual outgo will be in excess of Rs. 1 lakh crore. Going by the cuts which have been imposed in this year's budget, the next year's allocations have no sanctity and there is therefore hardly any point in discussing them.
The subsidy bill of the government has increased from Rs. 1,98,000 crore to Rs. 2,58,000 crore in the RE for the current year. This only shows how the expenditure on subsidies was underestimated in the BE. The same trick has been resorted to again for the next year in which the expenditure on subsidies is shown as only Rs. 2,31,000 crore which is unashamedly unrealistic. The government is sitting over 80 million tonne of food grains stock. The FM has not indicated how he proposes to deal with this burgeoning accumulation.
The UPA government is solely responsible for the crises of the Indian economy. We had expected that the FM would come out with a bold budget which will inspire confidence in the Indian economy.