Budget 2013: An Economic Reform?

Budget-2013

With hardly a few days left for the finance minister to open the cat out of the bag and state his budget for the fiscal year 2013-14, people in all rungs of the social ladder will be expecting an economic reform to take place.

As stated in Abraham Maslow’s theory of human motivation, the first step is to attain the basic requirement of food, water and shelter. With rising prices becoming quite common today in our country, there is a need for economic stability among people of various income groups. The expectations of a farmer vary from those of a middle class man who manages to earn 3,00,000 rupees a year.

In a country primarily relying on its agricultural revenue, the importance of waiving off farming loans needs to be realised. This will greatly benefit those people who fall in a lower income bracket. Though the write off of central loans will save a lot of money for the state government, people contest the fact that waiving off loans is against the moral principles of lending loans; it penalises those who repay the loans. Not to mention, that the question of expectation comes into picture. Farmers might expect further loans to be waived in the future. The problem lies in the fact that when prices rise, these people are forced to spend a large part of their income on a basic requirement like food, which takes savings out of the equation.

For people in the middle income criteria, it’s about increasing the income limit for taxation. High taxation rates in times of inflation could hit hard in the financial positions of people in the middle income group. The standard of living of these people is reduced. The obvious solution then is to increase the tax rate for people who fall in the high income group. People will never hesitate to pay taxes if the money is used properly; increasing the tax rate for this income category forces people to deal into black money. The result: They focus on saving money rather than giving it out to the government just to be eaten off by corrupt politicians.

With the weakening manufacturing sector, there needs to be an increase in investment which could not only strengthen its stand, but also generate jobs for thousands. The manufacturing industries need a revamp in the way they are run. Adequate funding to improve the infrastructure of this industry and construct more micro-industries could help boost growth and generate jobs which could in turn reduce the percentage of unemployment.

And coming to one of the most important aspects; education.

Education is the backbone of a developing country like India. A lot of thought has to be given to allocating funds for promoting students to pursue higher education, particularly those from a poor financial background. Exceptionally talented people of a poor background need to be encouraged by providing more government scholarships. Infrastructure in schools situated in the rural areas could be improved. People here fail to send their children to school because of improper sanitation facilities. This is a primary requirement especially for girls. And such steps will affect the literacy rate on the whole. The last venture of providing mid-day meals to children helped a great deal in increasing the number of students who turn up in school. Such innovative ideas are in call for, in order to improve the standard of education provided to the poor.

With energy crises in states like Tamil Nadu, where the output from industries have been poor due to acute power crises, investing in transmission lines to benefit the transfer of power could go a long way in increasing the throughput from industries.

Power, unlike edible entities like milk (which can be transported easily) needs transmission lines to transfer it from one state to another. Improper infrastructure of transmission lines to carry power from states like Gujarat to Tamil Nadu is one of reasons for the daily two hour power cuts, which can in turn affect the working of software and manufacturing industries. And since fuel price always seems to be exponentially increasing, the possibility of using generators is completely eliminated.

The Aadhaar (Unique Identification Authority Of India) was a great step towards mobilizing funds and preventing corruption, or at least keeping it to a minimum. Nandan Nilekani took the great responsibility of leading the team to work on the Aadhaar. A great deal of investment went into infrastructure development, since this requires optical fiber lines to reach villages and rural areas. In the Aadhaar scheme, money is transferred directly into the concerned person’s account which prevents its misuse. Further investment is an assured necessity for its full-fledged use throughout the country. But the next task lies in integrating Aadhar throughout the country and partnering up with nationalised banks for error free transfer of funds.

Today, India is witnessing a dull period in its economy with GDP falling to as low as 6 percent in the last quarter. Economists are predicting only slight signs of improvement in the GDP this year. However, an analysis in October 2012 did show that the manufacturing and production sector are picking up.

The current situation reminds me of the economic crises that hit our country a decade ago. In 1991, P.V Narasimha Rao turned to Manmohan Singh, making him the finance minister, to overcome the financial crises the country was in. He succeeded in bringing the country back on track as far as the economy was concerned. And today a revolutionary economic revolution is in call for by Mr. Singh’s government.

The UPA have been staunchly criticized for its incapability to act for the past few years of its ruling. They have been written off the 2014 elections.

But a satisfactory and promising budget this year could probably affect the way the votes swing in the 2014 elections. Maybe we all could have something to look forward to.

Hari Krishna

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