My comments on the Budget 2008 will deal with what the finance minister has done as well as what he has not done. Let us first deal with what he has not done. He has done precious little for infrastructure. Infrastructure development is a double edged weapon. In the process of its development it contributes to investment demand in the economy and when completed it adds to the efficiency of the economy. For an economy which is slowing down such a thrust was greatly needed. The finance minister has failed to provide it.
This is perhaps the first budget from the post reform era which does not even mention the words ‘economic reform’. The government has given up on economic reforms. Not one single measure of reform has been provided for in this budget. The Economic Survey presented to Parliament a day before has clearly spelt out the challenges before the economy and has devoted a whole chapter to policy responses to meet those challenges. The finance minister has completely ignored this document prepared by his own ministry.
High inflation has been a persistent feature during the UPA rule. This has led the banks to raise interest rates. The tight money policy of the RBI has created further problems. Demand has decelerated and the economy has already entered the slow down phase. One would have expected the finance minister to tackle these problems determinedly in his budget. He has failed to do so completely. There are grim days ahead for the Indian economy.
He has tinkered with the tax rates which will provide only marginal relief to the tax payer. One expected deeper cuts on the tax front. Even the abolition of the Banking Cash Transaction tax has been postponed by one year.
Even his famous loan remission scheme for farmers is full of problems. He has not specified as to who is going to foot the bill. He has not provided for it in the budget. My suspicion is that he is going to pass the burden on to the next government. This is highly unfair. The earlier package of Rs.17, 000 crores for farmers in the four states, Andhra Pradesh, Maharashtra, Karnataka and Kerala has already failed.
This budget has been prepared clearly with an eye on elections. The government, however, forgets that the people of this country are cleverer than it thinks.