I am no financial expert for loves playing with numbers. Neither am I financial professional who can play with numbers at his fingertips. I am just an ordinary student and a citizen of this country who was recently wondering what the Union Budget 2011 will hold. There are many like me who are worried about all the issues plaguing the country of late from scams galore to black money in the Swiss markets to rising inflation and also increase in prices of basic commodities from food to fuel.
In this scenario there are many questions. Will the budget be just another set of numbers by the government to please the masses? Will the budget really make a difference in the FDI in the country which has fallen by about 36% in 09-10 compared to 08-09? Will the budget rein down the runaway inflation? All these questions and more stare in the face of the common consumer. I have laid down the top 10 expectations I have from the Union Budget this year –
1.Lowering the fiscal deficit – Compare this: Before the Lehman crisis we were at 8% GDP growth rate with a fiscal deficit of about 3%. Today with a GDP closing on 7% we have a fiscal deficit of about 6%. The question is “Why is the government taking so long to reduce it to about 2-3%?” I wish Mr Pranab Mukherjee can answer that question better than me. And interestingly other than the spectrum sales which cost Rs 1 trillion and the divestment which cost Rs 50,000, our fiscal deficit has been far worse.
2.Curbing the black money and corruption problem – 2010 seems to have been the year of scams from Commonwealth Games to the Adarsh Housing Society. The issue of trillions being held in Swiss banks has been an even bigger problem for the government to deal with. Pranab da’s response has been pretty ordinary till now on both these issues. Can he rise beyond the ordinary with his points this time?
3.Food issues – From the problem of food subsidy ballooning to Rs 80,000 cr compared to the budgeted Rs 55,000 cr to even the rising prices of food crops and heavy hoarding issues, Mukherjee has a lot on his plate which he obviously can’t eat. More money needs to be allocated in the cold storage facilities to prevent losses of crops before reaching the market. In the name of food security more money maybe allocated to the spoilt PDS or the 2nd Green Revolution which can result in disaster. Instead importance should be given to crop insurance and establishing grain banks at talukas and local levels and linking to national levels.
4.Spending on education – Increased spending in this sector has resulted in greater enrollment with more than 90% students going to schools at the primary level. The mid – day meal scheme has been pretty successful at many levels. But questions like the quality of education, the continuing absence of teachers etc. need to be addressed immediately.
5.Tax collections – The FM aims to reduce the tax collections this year as the tax collections last year have been around 15% more than what was envisaged playing a small part in bringing down the fiscal deficit. With India moving to the Direct Tax Code, the amount of tax breaks and tax holidays will go down. Will decrease in tax collections result in increase of fiscal deficit?
6.FDI – With increase in inflation, rising prices, the black money problem and the increasing reportage of scams across the country, the FDI has fallen by a huge amount in this country. Tesco, Carrefour, Wal Mart are among the many retailers who are waiting to start operations on their own in the country. Will the government allow this move? Will it be able to bring back the FDI required?
7.Infrastructure investments – India needs more than US $500 billion in the infrastructure sector to grow forward. Establishing of a debt infrastructure fund is the most important thing. What happened to that US $11 billion debt fund which Obama had talked about while he was on his India visit? Obviously such spending in infrastructure is beyond the ability of the budget. But Pranab is too clever to know that investments in infrastructure benefit sectors from the industry to the tourist arrivals.
8.Schemes of Food Security and the other social schemes – The fiscal deficit has to be reined in and that too fast. But can the government’s spending in schemes such as Food Security and other social schemes be the right thing at this time when money is a problem. But then not investing in Food Security would be a problem too.
9.Subsidies for kerosene/ LPG? – They have talked about having a marker to prevent adulteration. They have talked about using the UID cards to prevent deaths as that of Sonawane. But the question is with kerosene and LPG being sold with so much subsidy, till when would oil companies keep losing money like this? Pranab needs to show some real action on part of the government in this case.
10.Can growth rate be maintained? – Last but not the least, the biggest question is after all these issues, can our growth rate be maintained at 8.5% as projected by some agencies? Can we reach that?
What are your expectations from the budget?