Commentary/Mani Shankar Aiyar
Chidambaram has become the first finance minister in
50 years to think that Budgets are for the rich
What is required to ensure a high growth rate is not merely
tax reductions, but a much stronger
commitment to providing infrastructure and power.
It is disgraceful that the central
plan outlay in 1996-97 has been Rs 100 billion less than the
budgeted outlay. Worse, compared to last year's Budget
outlay, the central plan
shows an increase of only six per cent, which is lower than the
current inflation rate. Therefore, the finance minister is, in
effect, proposing stagnation in development outlays.
The Budget thinks nothing of stagnation in central plan
outlay affecting the prospects of income and employment for the
poor. Nor is Chidambaram bothered about inflation continuing
at near-double-digit figures -- and that too, at twice the rate at
which prices rose during Manmohan Singh's last year in office.
Worse, apart from the pious promises, the finance minister
has done nothing to control the spiralling food prices. If the revamped
public distribution system is the answer to runaway inflation
on the food front, then it is significant that the finance minister
has not made provisions for the huge additional expenditure
required to finance this dodgy new scheme.
Chidambaram gives the impression that he has not considered the
consequences of the Pay Commission
recommendations at all. But this is actually to fudge the
figures and claim that the fiscal deficit has been contained within
the five per cent target. In fact, all the finance minister has done
is to postpone the day of reckoning. This is not a budget but a self-deluding optical illusion, he has presented.
That being so, what the finance minister is hoping to get away
with is a 'monetised deficit,' of Rs 160 billion. This will be the largest
provision for printing money in our financial history. Given
all the expenditure which the government will have to undertake,
and which Chidambaram has hidden from sight by aningenious sleight
of hand, the actual magnetised deficit this coming year is going
to be much, much larger. Since the currency printing
leads to inflation, the burden of Chidambaram's 'Monopoly' game
will land (where else?) on the poor by way of spiralling prices.
Thus, this is an uncaring Budget -- the finance minister has protected
the rich and exposed the poor.
Chidambaram has explicitly taken as his model the Tigers
of South-East and East Asia and had the gall to actually say,
in an interview to The Times of India, that he intends
to make India an 'Asian' country! There is simply no
objective basis for imaging that whatever works elsewhere will -- or
should -- work here. We have to find Indian solutions to Indian
problems. We should not become a pale imitation of someone.
All
those 'miracle' countries are, or have been, authoritarian
states. Some, like the Philippines and Thailand,
tolerates social inequalities which have no parallel in our democracy;
Others, like Singapore and Hong Kong, are city states with virtually
no rural or agricultural populace. And most of the larger ones --
China, Indonesia, Malaysia -- are abundantly endowed with oil.
We have a great deal to learn from each of them. But if we start
chasing the chimera of becoming one of them, we will certainly
end up losing our democracy and fundamental rights. We
will probably end up generating so much social tension as to threaten
our integrity and, thus, our cohesion and independence as
a nation.
Manmohan Singh's so-called new economic policy drew its sustenance
and justification from past successes. It was because
past policies had nurtured, expanded and diversified entrepreneurial,
technological and managerial talent to its present level of maturity
that liberalisation proved possible. But the budgetary resources so
saved were diverted to the twin areas of poverty alleviation and
human resource development -- specially, education, health and women
and child development.
This Budget chases the Holy Grail of someone else's model -- and
does so on the basis of unrealistic, even dishonest, assumptions.
Chidambaram has become the first
finance minister in 50 years to think that Budgets are for the
rich.
The poor will have to pay a heavy price for his illusions.
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