New Delhi, Feb. 12: P. Chidambaram’s job of budget-making at a time when growth has slumped to the lowest rate in the decade is going to be influenced more by political exigencies than fiscal prudence.
If the next financial year comes against the backdrop of pitiable economic parameters — growth rate has dipped to 5 per cent from 8 or 9 per cent during the bulk of the UPA regime — this is also the government’s last full-fledged budget before the general election. The Congress leadership is in no mood to take risks despite the gloomy economic scenario.
A Congress general secretary said: “The finance minister would have learnt what the party desired at the Jaipur Chintan Shivir.”
Chidambaram will formally meet party office-bearers on Thursday to elicit their expectations from the budget. Most leaders, from top to bottom, are rehearsing the “pro-poor” refrain, hoping the finance minister will swing to their tune and not the reform-friendly hits usually associated with his budgets.
Although AICC office-bearers find this exercise unnecessary as Chidambaram might have understood the party’s mindset at the Jaipur meet, they are eagerly waiting for another opportunity to rub the message in.
In the Jaipur Declaration, the tenor of both the political and economic challenges left little doubt on the direction the Congress plans to take in the remaining part of its regime. While the political challenges section talked of economic growth for “aam aadmi representing the poor and the middle class”, the final draft on economy identified inequality as the biggest socio-economic challenge.
Out of the 17 paragraphs enlisting the economic challenges, one dealt with business environment and investments while the rest focused on the social sector and agriculture.
The final draft adopted at the Jaipur meet was a much sanitised version of the position paper on socio-economic challenges that painted a grim picture of India’s future, laying emphasis on the growing chasm between the rich and the poor, unprecedented unemployment crisis and the rising aspirations of the masses.
A senior minister said while speaking on economic challenges at the Jaipur meet that there could be violence on the streets in the coming years because of the wretched poverty in a large section of society.
The position paper prepared by a committee headed by Digvijaya Singh said: “There is need to strike a balance between fiscal reforms and need of the common people. Reform measures should be inclusive and should primarily promote interests of the common people.”
It also responded to the government’s concern about the huge subsidy bill, pointing out that subsidy management cannot lose focus on the interests of vulnerable sections of society. It asked the government to contain inflation “at any cost”.
The position paper, which was not made public, said: “Nearly 12 million enter the workforce every year and the unparalleled demographic dividend that this young workforce offers has the potential to catapult India into one of the fastest growing economies in the world for the next three decades, overtaking even China.
“However, if not tackled in a planned manner, the demographic divided can as easily turn out to be India’s biggest nightmare. Already we are facing anger and frustration of the urban and rural youth.”
The position paper talked of the positives of economic reforms, like the sharpest increase in per capita income second only to China, exports’ growth and high investments but also mentioned that inequality and poverty continued to be systemic problems.
It acknowledged that nearly 80 crore people live on less than $2 a day, around 40 crore have no or notional access to electricity and over 68 per cent have little access to health and sanitation. It also admitted that India houses the largest number of malnourished children.
Most Congress leaders say any attempt to give a budget that prioritises industry and deficit management would be insensitive and politically unwise as this government has to return to accomplish the unfinished agenda of social transformation.
“And a good beginning should be made by earmarking budgetary allocation for food security,” a senior leader said, reflecting the majority view in the party that will be conveyed to Chidambaram on Thursday.