Claiming to fulfil the needs of the common man as per the Common Minimum Programme, Pranab Mukherjee announced the interim budget in the Parliament on 16th February 2009. This was established by a quantum hike in the National Rural Employment Guarantee Scheme, Sarva Shiksha Abhiyan and Bharat Nirman schemes. In order to empower the rural women, two new schemes- Indira Gandhi National Widow Pension and National Disability Pension Priyadarshini Project will be initiated.
It also focussed on the international meltdown and the solution provided bu Pranab Mukherjee was active participation by the government in the form of increased expenditure on infrastructure and employment generation.
However, the fact of the matter is that though he himself admitted that extraordinary measures were required to tackle the crisis situation, what is ironical is that the budget proved to be extremely ordinary. It decided to adopt the “do- nothing” approach. The country today is plagued with problems of unemployment, rising grain prices, lack of investment and unrealistic fiscal deficit figures. This requires drastic measures, one which the UPA government has failed to take. In this sense, it is a wasted opportunity. The budget has drawn flak from both the Left and the NDA. Sitaram Yechuri has gone to the extent of saying that the UPA government is living in a state of denial about the gravity of the impact of the global recession on India. He has criticised the budget to be an election manifesto- a balance sheet of their past achievements.
Though the budget hails the farmers and focuses on agriculture considerably, what should be noticed is the fact that in the previous years also less was spent than was allocated and the present budget has allocated less than what was spent in the previous years.
Bailouts are not the solution to this problem. What is required is the application of Keynesian economic principle of increasing domestic demand through increased public expenditure. Here, the argument that the fiscal deficit is touching 6% also does not hold water for the sole reason that in a phase of recession, the focus should be on the upliftment of the economy.
What is of great import is the fact that the government in this situation of recession also failed to provide any tax cuts. This came as a major disappointment in the light of the fact that elections are about to take place in a couple of months time. This was reflected in the plunge that the NSE and the BSE took. The Sensex plunged by 792 points, since the budget did not provide the expected tax sop and sector- specific stimulus package.
However, all is not sad and gloomy. The focus on education and agriculture is laudable. Ultimately, it was a vote-on-account and nothing much was being expected out of it. Even then it cannot be denied that it was more of a populous budget than one focussed on improving the state of the economy. The general opinion is reflected in the statement issued by Nandan Nilekani, Co- Chairman, Infosys Tech, when he says,
“It was more of a report card on the government in the last 5 years than any new specific proposal. Anything that has a new dimension will probably come in only after the new government comes in.”