Times are tough … surely! So much so that any non-negative is beginning to be seen as positive. By this approach, in not being overly populist in a pre-election year, the Union Budget 2013-14 is a positive. But then, tough times are actually favourable for tough measures.
By this approach, the budget must surely go down as yet another missed opportunity.
And what is that missed opportunity? It is that having identified the problems correctly, the government seems to have got its solutions wrong.
Make no mistake: the FM’s speech highlighted the problems very accurately and articulately. To quote one of the problems, “The link between policy and welfare can be expressed in a few words: opportunities, education, skills, jobs and incomes.” But the solution to this seems to be one word … Government! So you have a whole array of government programmes and “sub-plans” to address these issues — from Pradhan Mantri Gram Sadak Yojana (I & II) to National Skill Development Corporation to Direct Benefit Transfers to Nirbhaya Fund (for women-oriented initiatives) and even an all-women bank!
But then, the government seems to have forgotten the other part of the solution … entrepreneurs. And this was the key opportunity missed – to rekindle the spark of entrepreneurship which had earlier fuelled the economy to its heights of 8 per cent plus growth from 2004-08. Is India welcoming with open arms domestic as well as international entrepreneurs? What have we done to make India a preferred investment destination?
The external sector problem, too, has been well articulated. To quote again from the budget speech, “My greater worry is the current account deficit (CAD). The CAD continues to be high mainly because of our excessive dependence on oil imports, the high volume of coal imports, our passion for gold, and the slowdown in exports. This year, and perhaps next year too, we have to find over $75 billion to finance the CAD.”
But as in the first case, here too the proffered solution appears one-sided — “There are only three ways before us: FDI, FII or External Commercial Borrowing (ECB).” The FM seems to have missed both aggressive export promotion and active import substitution as the more structural and self-reliant solutions to CAD. There is nothing in the budget which focuses on either or both of these. The weakness in the rupee after the budget may be taken as a sign that the forex market too remains concerned.
Even some of the revenue assumptions seem ambitious. Thus, the 2013-14 estimates seem to build in some ambitious targets like PSU divestment of over Rs 55,000 crore and telecom spectrum revenue of over Rs 20,000 crore. In 2012-13 PSU disinvestment was Rs 24,000 crore versus budgeted Rs 30,000 crore and spectrum revenue barely Rs 1,000 crore versus budgeted Rs 40,000 crore.
To be fair to Mr Chidambaram, he has made bold announcements preceding the budget, and probably even bolder announcements are in store post-budget, Mint Road included.