New Delhi, Feb. 3: After an unprecedented 70-minute Opposition attempt to stop the government from presenting its interim budget, finance minister Jaswant Singh painted a rosy picture of the economy and held out another bag of sops, the fourth within the space of a month.
This time the goodies were for government employees, rich farmers, small businessmen, people returning from abroad, and people living below the poverty line.
The pre-poll sweeteners include a Rs 3,500-crore annual giveaway to a three-million-strong bureaucracy. DA — to the extent of 50 per cent — for central government staff stands merged with their basic pay from April 1. This will fetch them hefty increases in allowances (ranging from 10-20 per cent of the gross pay).
There was also the promise to raise the income-tax exemption limit if the ruling coalition was voted back to power.
Singh extended by three years the capital gains tax waiver granted last year on equity investments. But the stock market was unimpressed, driving the Bombay sensitive index down by 75 points.
He said the economy this year would grow at 7.5-8 per cent — the fastest since the reforms began in 1991. Inflation — the bugbear that could spoil the “feel-good” party, having already gone beyond 6 per cent — was almost wished away with Singh claiming that it would be reined in at 4-4.5 per cent by the end of March.
How' He didn’t say.
The finance minister said the macro-economic situation was “better than ever before in the last 50 years”, though the target for fiscal deficit — where government expenditure exceeds revenue — at 4.8 per cent would only drop back to the level prevailing when this regime took over. This, too, is a result of accounting jugglery, with income from sale of public sector shares and lower-than-projected expenditure on defence, for instance, counted in.
Singh announced a plan to create hospitals matching the standards of the All India Institute of Medical Sciences in 12 cities, a scheme to tackle water shortages in four cities, cheap foodgrain for poor rural families and a host of measures for his home state — Rajasthan.
“Economic development is not about economics alone. It is always simultaneously a political statement, too,” he told Parliament.
A former army officer, Singh made a strong military statement. The defence budget was raised by 10 per cent to Rs 66,600 crore, but the more important part was the creation of a three-year Rs 25,000-crore fund for modernisation of the forces.
Hidden in the fine print of his papers is a move that will be hailed as reformist, but will bite all consumers, though only after the polls. Singh proposes to pare subsidy on cooking gas and kerosene by almost halving the budgetary allocation on this count for the next fiscal. Officials said gas and kerosene prices would not go up till the elections were over.
To please rural voters, Singh reiterated a series of measures announced earlier for farmers, including setting up a mechanism to ensure availability of timely credit. He said the promised agriculture infrastructure credit fund, small and medium enterprises fund and the industrial infrastructure fund being set up to dole out cheap credit would be made operational shortly.
He promised to exempt acquisition of agriculture land from capital gains tax, an issue which has been agitating rich farmers in states through which the Prime Minister’s highway project passes. The outlay for the highway programme, which figures prominently in the government’s media campaign, was raised by almost a third for the coming year.
Singh brought cheer to call centres by removing a tax on their incomes. He also halved the duty on central government stamp papers. The stamp duty cut will be applicable to instruments where the authority to fix the rate lies with the Centre.