Former Finance Minister to Current FM: Budget 2019 is an Account for Votes
What was the government doing for five years?
My one line comment on the Budget is that it was not a Vote on Account but an Account for Votes.
The Interim Finance Minister tested our patience by the longest Interim Budget Speech in recent memory. It was not an Interim Budget. It was a full-fledged Budget accompanied by an election campaign speech. By doing so, the government has trampled on time-honoured conventions.
A government confident of returning to power would have respected the conventions. It is crystal clear that the government has no hope of returning to power and has, therefore, acted desperately and recklessly, and in violation of the Constitution.
Fiscal Stability Weakened
The big takeaway is that the present government has further weakened fiscal stability. For the second year in succession the government has missed the Fiscal Deficit target. The revised estimate shows a slippage from 3.3 per cent to 3.4 per cent. Worse, for 2019-20 too, the government has proposed an FD of 3.4 per cent. The government has thrown the FRBM Act out of the window.
Similarly, the government will end the year with a Current Account Deficit of 2.5 per cent as against the CAD in the previous year of 1.9 per cent.
Both numbers for the current year and the estimate of FD for 2019-20 point to incompetent fiscal management and a disdain for fiscal prudence.
Let’s now look at the announcements: all of these are last-gasp announcements by a government whose term will effectively end in about 90 days.
1. Suddenly, the government has remembered the cows and announced a Scheme for their welfare and provided a grand sum of Rs 750 crore.
2. It has announced the setting up of a new Department of Fisheries.
3. It has announced a new contributory pension scheme for 10 crore unorganized workers that promises a pension of Rs 3000 per month on their attaining the age of 60 years and allotted a paltry sum of Rs 500 crore.
The question that naturally springs to one’s mind is ‘if these were important and necessary interventions, what was the government doing for five years?’
Measly Farmers’ Income Support
The government’s desperation is proved by its announcement of the Farmers’ Income Support Scheme to provide a measly sum Rs 6000 per year to every small/medium farmer. The Fiscal Deficit numbers are telling. By recklessly breaching fiscal discipline, the government will fund the Scheme this year entirely out of borrowed money of Rs 20,000 crore Next year too, the Scheme will be funded entirely out of borrowed money of Rs 75,000 crore. While I welcome the support to farmers, I ask what about the non-farmer poor? What about the urban poor?
The new scheme is intended to help the farmer, but in reality it will also help the absentee landlord. I would like to ask how the government will reach the money to the tenant-farmer and farm labourer who actually tills the land.
I have no doubt in my mind that the Congress’ announcement of a Minimum Income Guarantee will bring true relief to all the poor households/families of the country, both farmer and non-farmer and both rural and urban.
Tall Claims that no one believes
The overall impression one got from listening to the Budget Speech was that the government believed its own fake statistics. Every report from the field — from academics, NGOs, journalists etc — has exposed the false claims made in respect of ODF-free villages, domestic electricity connections, use of LPG cylinders and Mudra loans. None of the numbers put out by the government is true, but the government is so blinded by the dazzle of its fake numbers that it is not able to see that thousands of toilets that were constructed are unused or unusable; that there are thousands of villages and millions of homes that do not get electricity; while the homemaker has taken the first free cylinder and the stove she does not take the second or subsequent cylinder because she cannot put together a lump sum of Rs 750-900 on the day she needs the money; and the Mudra loans have only added to the accumulation of NPAs. No one believes this government’s claims any more and I too shall dismiss the tall claims as irrelevant.
The direct tax concessions were beyond the authority of the government that will lay down office in 100 days. They seem to have been added at the last hour after the Budget numbers were finalized. We will study them carefully in order to find out if they are in accord with the projections of revenue from income tax.
In conclusion, I have to point out that while I am a strong supporter of the use of Hindi and English as official languages, no one intended that the two languages should be used alternately or simultaneously. Those who knew only Hindi did not understand one-half of the Budget Speech and those knew only English did not understand the other half. Perhaps that was the real intention of the government: leave the people confused at least for a day.
The mist that wraps this Budget will lift by tomorrow and the people will see the desperation and recklessness of the government.