Union Budget 2014-15: Manoeuvres for the future

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By Amar Yumnam

The five-day- old Railways Budget had given us enough indications of the orientation of economic thinking of the new government at the Centre. These have further aroused the expectations from the budget to be presented to the nation. In this context the one presented by Arun Jaitley to the Indian Parliament today need to be subject to critical scrutiny.

The Union Budget 2014-15 is not an exciting budget for unlike the previous ones which promised outcomes within the shortest time. We must recall that these budgets fail to deliver. The new budget of Modi government adopts a different strategy. It articulates the proposals with an objective to be achieved in a medium term frame. In fact, the beauty of the budget lies in the articulation of institutional and scheme interventions with a long term perspective. It implicitly talks of institution building today for better socio-economic outcomes in the coming few years.

The objective of the budget is “to usher in a policy regime that will result in the desired macro-economic outcome of higher growth, lower inflation, sustained level of external sector balance and a prudent policy stance.” It talks of “beginning of a journey towards a sustained growth of 7-8 per cent or above within the next 3-4 years along with macro-economic stabilization that includes lower levels of inflation, lesser fiscal deficit and a manageable current account deficit. Therefore, it would not be wise to expect everything that can be done or must be done to be in the first Budget presented within forty five days of the formation of this Government.” Given this orientation, the budget focuses on institution building for enhancing the capability of the economy and society to perform and deliver. The only significant immediate focus relates to the defence sector and the internal security; the government must have been alerted by the naval accidents in the recent past and the rising Maoist attacks. The imp
ortant institutional proposals contained in the budget are: (a) Expenditure Management Commission; (b) High Level Committee for regular interaction with trade and industry; (c) Infrastructure Investment Trusts; (d) National Institutes of Ageing; (e) Model Rural Health Research Institutes; (f) new IITs and new IIMs; (g) upgradation of film study centres in Pune and Kolkata; and (h) National Industrial Corridor Authority. These institutions are for strategizing the long term intervention needs for development. As regards schemes which could have immediate impacts, we may mention (i) irrigation scheme named Pradhan Mantri Krishi Sinchayee Yojana; (ii) total sanitation by 2019 programme under Swatchh Bharat Abhiyan; (iii) programme for providing regular power supply to all households under Deen Dayal Upadhyaya Gram Jyoti Yojana; (iv) Start Up Village Entrepreneurship Programme; and (v) National Rural Internet and Technology Mission. Other important features of the budget are the innate emphasis on accountability
for performance and delivery and the focus on providing urban facilities in rural areas.

From the angle of the North East, there are three ways we can look at the Budget. First, it displays understanding of the cultural differentials of the region from the rest of India as reflected in the sports interventions promised. Second, there are areas where it recognises the potential of the region in organic food products without specifying the interventions to be initiated in right earnest. Third, there were expectations that the new government would appreciate the differential development requirements of the region and reflect them in the budgetary policies in a way different from all the budgets so far. This has not happened. Here the regional governments need to be prudent to take advantage of the enhanced allocation for SC and Tribal Sub Plan, financial inclusion measures, etc. included in the budget. The budget allocates an enhancement in the allocation for SC and Tribal Sub Plan respectively of Rs. 8987 crore and Rs 7789 crore over the previous fiscal. If the States are prudent, the budget has al
so schemes for linking with the banking system without collateral which can be accessed for the benefit of these groups of people in the North East.

 

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