Budget 2013: Beyond The Smokescreen
3/7/2013 9:00 PM Thursday
When the Finance Minister presents the budget, a whole nation listens in anticipation. Will he increase taxes? Will he bring down subsidies? What happens to economic growth? Will the markets tank? Questions and more questions surface and float around until the big day, when the minister discloses what’s in store.
This year has been rather different. The return of P Chidambaram to the Finance Ministry after a gap of almost 4 years marked a turnaround in sentiments across the board. Overall, there was hope that the economy will now return to the growth path, that reforms will be carried forward in right earnest and that there will be enough reasons for the markets to cheer.
Having assumed the driver’s seat at the North Block, Chidambaram instantly delivered on the expectations. Reforms began rolling in at a faster clip, the economy looked like it was reviving itself and getting onto a higher growth path, and the financial markets rejoiced as worries seemed to be dissipating. The result of all this was obviously a huge buildup of expectations from the big event – Budget 2013.
The character of the budget, particularly in a year to be followed by elections, is more or less a foregone conclusion. Lots of public spending, hordes of projects and crores spent on wooing the voter. So, while the FM was expected to come out with a populist budget, the challenge remained to see how he would exercise fiscal prudence, which was the need of the hour.
Well, the statesman that he is, Chidambaram delivered something which commentators and experts have dubbed as a good attempt at juggling both aspects. Malvinder Mohan Singh, Executive Chairman, Fortis Healthcare says, “The budget has pulled off a good balancing act by containing the fiscal deficit to 4.8 per cent and provides what the country needs at the current juncture”.
But a closer look at what has actually come out reveals a rather pale attempt at masking the compulsions of sovereign financial management. There is nothing in the budget which can conclusively brand it as good or bad. In fact, there is tremendous disappointment following the gap in what was expected and what has been delivered.
So, what is the government’s plan of action for the next financial year? Will the budget really yield any of what it is expected to? Are the proposals practically achievable? How will the government’s balance sheet shape up after such a budget? Here are some answers which should clarify why we believe that this budget lacks any practical applicability in the current circumstances.
Find More Articles on: DSIJ Magazine, Cover Story, Budget, Budget - DSIJ Analysis