A budget, economical with the truth

Business Line | March 04, 2013 | Byline: Piyush Goyal

I had high expectations from the budget this year but have been taken aback by the unviable promises made and the specious accounting exercise that has been carried out. Let me point to three such instances. First, as far as I can recollect, this is the first budget which shies away from estimating a real growth rate for the GDP. While the Finance Minister has projected a nominal growth of 13.4%, what is left unexplained is which of these two drastically different scenarios we expect to find ourselves in, twelve months from now a resurgent India with 9% real growth with 4% inflation or a stagnant India with 4% real growth with 9% inflation. We have two variables but just one equation a classic non-solution; just as this budget is, for a vast majority of the country. Second, the budgetary projections on revenue are brave, to put it mildly. It is worth noting that corporate revenue receipts in 2012-13 increased by 11% when the nominal GDP increased by 12%, yet corporate taxes are projected to increase by 17% despite projected nominal growth of 13.4%! I dont seem to be able to bridge these numbers. Similar egregious assumptions are used for revenue projections of service taxes and excise duties as well. I can understand some amount of leaning back to make oneself look good, but bending over backwards has rarely been a successful strategy. Third, 2012-13 fiscal deficit has been controlled marginally by decreasing capital expenditure and reduction in planned spend. But hikes in non plan expenditure seem perplexing. This can be seen repeatedly in the Governments record in implementation of targets. We were told 18GW of power capacity would be added in 9MFY13, but the Economic Survey released yesterday informs us that less than 10GW has been added (i.e. less than 55% achievement rate). A bold, reformist Finance Minister would have bitten the bullet and cut wasteful expenditure first instead of potentially taking us to a downward spiral of jettisoning capital expenditure, leading to lesser investments in infrastructure, leading to lesser job creation, leading to lower demand, finally leading to lower investments. I pray and hope that we are not sliding towards a phase of stagflation marked by stagnating growth and indomitable inflation. This is a time for visionary leadership for rejuvenating the India story and unfortunately, the UPA has failed us, again.

(The author, a Rajya Sabha member, is National Treasurer of BJP)