Mantra of Union Budget: Fiscal consolidation

P Chidamabaram’s February 28 Budget will not have any big-ticket ideas, reports Sheela Bhatt

So do you agree that the Railway Budget was a damp squib and it contains NOTHING to talk about? If so, then, don’t blame Railway Minister Pawan Kumar Bansal alone.

Great ideas do not sustain on air; they require money.

There is no money with the Central government. Meet any secretary in North or South Block and they complain of squeezed budgets, lost opportunities and lack of enthusiasm for pushing new ideas.

The middle class and business class are afraid of the prices of real estate being stagnant. India’s endless comparison with China sounds like a yesteryear story.

The lack of big-time investment in the education and health sector is not the only sore point. In the power sector too, administrative delays are going to cause more political upheavals.

Tamil Nadu Chief Minister Jayalalithaa’s latest term in office is marred by the frequent power cuts in her state. The only good thing going for the February 28 Budget is lack of expectation. It is quite clear that P Chidambaram’s budget is already "discounted" in the corridors of North Block.

Set aside figures (the Indian economy grew at the rate of 5.3 per cent in the later half of 2013) for a while. Just meet any members of Parliament in the lobby of Lok Sabha and they say back home in their constituencies there are no jobs. When the growth rate decreases by one per cent roughly around one million jobs directly get affected.

The government, more precisely Finance Minister P Chidambaram, is in a bind. Damned if he does it, damned if he doesn't! If he goes for a populist budget he loses grip on the fiscal balance. And if he tries to get a grip of the economy by introducing some fiscal discipline he will not grab eyeballs on television and his party will lose political points.  

If one believes two of colleagues in the Cabinet, Chidambaram is unlikely to give a historic budget. It won't have any big-ticket ideas.

The government and the Congress will like to play safe and indulge in a political-economic gimmick later, closer to the election.

One of the ministers told rediff.com, “ The upcoming February 28 Budget will neither be pro-poor (meaning no big-ticket freebies) nor anti-middle class (no attempt to grab attention of urban voters giving dramatic tax benefits or Sensex-targeted soft steps).

It will be highly focused. The government is trying to do a fiscal consolidation.”

Most Congressmen are saying that the government will have to focus on fiscal consolidation due to the fear of downgrading by international agencies.

A senior minister, also, emphasised that “if we improve the economy eventually it will improve the stock of the government”.

No government can do fiscal consolidation if it indulges in populist budget tricks.

On Tuesday, Prakash Karat and other members of the Left parties met Prime Minister Manmohan Singh to hand over a memorandum signed by 4,01,00,273 Indians, “urging the government to take immediate measures to bring a food security legislation in this Budget session of Parliament, which would provide for a universal public distribution system, ensure 35 kg of foodgrains at not more than Rs 2 per kg and end the cash transfer scheme for the PDS.” 

What is reflecting in these millions of signatures is the ground reality. In view of the shrinking job market, more and more rural people are looking forward to the Food Security Bill.

The Congress can’t ignore the pressure put by the Left parties and will have to show its commitment in form of allotment for food security through budgetary provision. An issue like this has posed a real challenge before Chidambaram. Congress leaders say that with the industrial output down, a rise in inflation of retail items and import-export trade figures working against the economic interest, how can you expect Chidambaram to do miracle in the yearly budget? They say India’s woes are compounded because of the lack of investment coming from abroad in infrastructure projects due to the global slowdown.

After a dull speech by President Pranab Mukherjee at the beginning of the Budget session, which outlined the government’s action plan, and after a nothing-to-rave-about Rail Budget if Chidambaram’s Budget gives no news it may be construed as bad news.