The Hindu Business Line : Long on intent, short on content

The Budget has been widely dubbed as tepid, timid, ritualistic, missing out on opportunities, disappointing, and so on. Over the years several great and dream Budgets have often been anti-climactic and, worse, their authors have often not been returned in the ensuing elections.

All the Budgets since the onset of the reforms are of the same genre — characterised by the similar segments they chose to address — the urban middle-class and the rich, capital market investors, the FIIs, and the corporates — and those they ignore — the aam aadmi.

The recent Budget looks a little lost for there is nothing more to do in such `traditional' areas as the capital market, income-tax, integration with the global economy and rationalisation of tax structure, being quite close to completing the agenda, and with no clear idea on how to address the concerns of the ordinary man'.

Stark contrast

Finance Ministers at both ends of political spectrum simply failed to find the right balance between the `reformist' and the `populist' Budget. The contrast is starker today than any time in the past. A look at the problems and the `definition of needs' of the aam aadmi (who should account for 70 per cent of the population) and the delivery thereof in the current Budget (as in the past ones too) capture the reasons for the defeat of reformist governments at the hustings.

The problems confronting the aam aadmi are farmer suicides, high foodgrain prices, low and non-responsive productivity improvements in the agricultural sector, successive crop failures in certain geographic zones, rural credit that refuses to flow, non-starter rural insurance, and widespread unemployment in many areas.

And what has the Budget to say on these? A promise to recapitalise the regional rural banks, allowing RRBs to raise FCNR loans, etc. Perhaps, the trouble is that there is no index of suicides and farmer distress that canwhipup the kind of response there is when the stock market crashes.

The entire government machinery, from the Prime Minister and the Reserve Bank of India downwards, swings into action, and pumps in public money to shore up the market. Farmer suicides in the numbers the country has seen should have generate an equally rapid and appropriate response, maybe by buying the distress loans from the money-lenders to reduce the pressure on the distressed farmers. But the Budget offers nothing remotely close.The immediate response to the foodgrains price increase in recent weeks would have been the direct action of importing and distributing the item is short supply.

The long-term response would have been a "price stabilisation fund'. But the Government's response is Customs duty cuts and a ban on futures trading in rice and wheat.

The promise to double the production of quality seeds by capital grants and concessional financing sounds like a promise to build better ships when the deck is burning.

The response to years of neglect in agriculture investments is a promise to sink 70 lakh wells, and a grant to the Indian Council of Agricultural Research to train farmers (1,000 a year) in 32 districts. The panacea for crop failures is weather-based crop-insurance, on a pilot basis in two-three States.

Too Little, Too Late

Almost as if farmer indebtedness has been just discovered, the Budget wants to appoint a committee to go into the details and submit a report. Then the Government will study the report, and formulate an action plan. It will be too little, too late, for the majority of farmers who are in terminal despair, unable to integrate with the national economy over the decades since Independence.

Long on intent but short on content when it comes to delivery for the aam aadmi, the Budget seems to deserve the flak it has received. But it also stands out for one remarkable aspect. For the first time perhaps, the aam aadmi seems to have come onto the radar screen, even if he has not been vouchsafed any real benefits.

Hopefully, this is the first of the Budgets that will target that neglected segment. Surely, popular (not populist) Budgets can also be reformist and election-winners too.

(The author is CFO with JK Paper Ltd.and can be contacted at swaksha_ad1@bol.net.in. The views are personal.)