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Budget 2014: We need a new imagination, a new beginning

The direction in this budget is no different from that of the previous government — one that basked in bureaucratic banality over efficient delivery. Partha Mukhopadhyay writes

ht view Updated: Jan 29, 2015 17:40 IST
Partha Mukhopadhyay
Partha Mukhopadhyay
Hindustan Times
Statue of Unity,Corporate Social Responsibility,FDI

The narrative around the Statue of Unity was built around collecting a kilo of iron from each one of our 600,000 villages. Additional support was to be mostly by private contribution. The possibilities were endless — the tallest statue in the world built not by an institution or a government, but by people, an endeavour that was truly collective — sabka saath — distinctly different from other such initiatives. The announcement of budgetary support for this enterprise has turned this into just another statist statue — just like the myriad paeans to Mao that dot the Chinese countryside — much bigger, but little different in character. A small fiscal contribution dragged down a soaring distinctive imagination, melting it in the banal furnace of this budget.

The other big disappointment in this budget was the announcement of the inclusion of slum development in the list of Corporate Social Responsibility (CSR) activities “to encourage the private sector to contribute more towards this activity”. Indeed, one had hoped that scrapping mandatory CSR would be among the first acts of this government. As an instrument, it is the starkest of admissions of government incapacity. By not raising taxes but mandating CSR, the government was almost stating in as many words that it is incapable of performing its public functions, not because it did not have money, but because it did not have the capacity, because if it did, it would collect more taxes and execute the function itself. If nothing else, one thought that this government considered itself samarth — able to deploy its capacity where available and willing to build it, where not.

The continuance of mandatory CSR strikes at the heart of this imagination and the inclusion of slum development is a double blow. Those who build our cities and those whom the state has been unable to help will now receive services, not as a right from their state, a recompense for their taxes and recognition of their contributions — but as scraps off the corporate table. This sends the worst signals about who the State really cares about. If that was not enough, the Union finance minister made it quite clear that “minimum built up area and capitalisation requirements” for foreign direct investment in real estate can be dispensed with, for projects which “commit at least 30% of the total project cost for low-cost affordable housing” in order to encourage the “Smart Cities, which will... provide habitation for the neo middle class”. Housing for the poor will be a leftover from FDI for the neo middle class.

The Union finance minister has been at pains to stress that this is a directional budget. One hopes not. The direction in this budget is no different from that of the previous government — one that basked in bureaucratic banality over efficient delivery. It was a government that gave the impression that it did not believe it could govern. Surely ‘minimum government maximum governance’ is not that philosophy. One thought that it was about minimising debilitating regulations and arbitrary decisions and maximising the efficiency of what government would deliver — not about minimising what government should deliver.

One was promised a different premise — “Yeh sarkar garibon ke liye honi chahiye” (the government should be for the poor), said the prime minister. The sabka saath, sabka vikaas imagination befits a government that speaks of universal services — available to all, but not availed of by all — of PDS shops that stock food, government schools that teach, hospitals that heal, wires that carry electricity and pipes that carry water, and yes, rivers that run — clean. But the lack of understanding of the potential of technology — that sought to ab initio separate citizen from resident — shows up in the budget too. The incumbent bureaucratic fascination is evident in the statement that to “improve targeting of subsidies, government has embarked upon an ambitious programme to directly transfer government benefits” — just like the UPA. Similarly, “better targeting of beneficiaries” is a key reform “to streamline food subsidy”.

One thought this government understood that technological advances, and Aadhaar may be one of them, are best used to evaluate but not exclude, to monitor and track — but not to target. It is only when services are universal that they are owned by all, only then can one have sabka saath.

Previous governments were bashful about taxes because they did not have faith that the government would be able to deliver public services. But surely, this view is not shared by a government that believes in maximum governance. Sadly, the basics of the budget lead one to believe otherwise. Non-tax revenue — comprising mainly dividends from the Reserve Bank of India, disinvestment and spectrum sales and this year also from a sly “unlocking of funds in the Public Account”, — is more than either excise or customs duty, and almost as much as service taxes. True, it is difficult to change patterns set by the last government quickly, but even by 2016-17, this government does not expect the tax-GDP ratio to reach the modest heights of 11.9% it reached in 2007-08. This is not what one should expect from an implemented goods and services tax (GST) and a revamped direct tax code (DTC). So, why is the bar set so low?

The country needed a new imagination — not just better implementation of old ideas. It did not need a sprinkling of munificence, evidenced by the now infamous `100 crore announcements, nor did it need sops to ‘lucky’ sports glove manufacturers, under the guise of promoting sports. It promised not just a change in government but also in governance.

Not only has the budget belied this promise of a new beginning, it has also belied its premise.

Partha Mukhopadhyay is senior fellow, Centre for Policy Research, New Delhi
The views expressed by the author are personal

First Published: Jul 13, 2014 21:54 IST