The UPA government is past the half-way mark. It is a crucial test of nerves for any government, leave alone a coalition government that has just received a setback in state elections. Finance Minister Palaniyappan Chidambaram needs to be commended for resisting the temptation to do a populist course correction. The urban middle-class may dismiss the Union Budget for 2007-08 as one which holds little for it. But that would be judging it somewhat harshly. The budget proposals unveiled on Wednesday may not contain too many giveaways. However, both individuals and industry have not felt the heavy hand of the taxman. The government has sensibly refrained from tinkering with the enabling factors that have led to sustained economic growth over the past few years. At the same time, it has taken steps to address immediate concerns like inflation, while shifting policy focus to the vast majority of the population, which is yet to enjoy the benefits of growth in any significant manner.
Agriculture, on which two-thirds of the population still depends for a living, has considerably lagged behind other sectors like manufacturing and services. It has also led to supply-side bottlenecks, which have led to a spurt in prices of essential commodities like rice, wheat, edible oils and pulses. The slew of measures for agriculture, including enhanced access to cheaper farm credit, incentives for development of better seeds and rural infrastructure, will help address both issues.
The expansion of the safety net for the rural poor addresses a critical need. And while nobody likes to pay more taxes, it is difficult to quibble over the imposition of an additional 1 per cent cess on taxes to create social infrastructure — fund primary education, provide scholarships for the underprivileged and create jobs for the physically challenged. As India transits from a developing economy to a rapidly emerging one, it becomes imperative to ensure that the phrase ‘inclusive growth’ also make the transition from buzzword to reality.
India has come a long way from the difficult days of the start of the reform process. Rising revenues fuelled by a booming economy have ensured the availability of funds. There is also a fair degree of consensus on policy imperatives. It is now up to the machinery of governance itself to ensure that the critical task of implementation does not get derailed.