ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Incongruence between Announcements and Allocations

A scrutiny of the Indian economy and the state of public finances reveals that while there are a few areas of improvement under the current government, the economy remains fragile and, worryingly, the situation has worsened in some other respects. It was hoped that the Union Budget 2018–19 would take measures to address some of these concerns but these expectations have been belied. Budget 2018–19, possibly with an eye on elections, has made grand announcements instead of taking hard decisions and making adequate allocations towards key sectors of the economy.

An Examination of Revenue Generation

The revenue side of the budget is scrutinised to understand if the government is being realistic about revenue generation in 2017–18. Clearly, there is over-optimism, given that economic growth will be slow. Too much is expected from voluntary disclosure and penalties, while incentives are not in place. It would make sense to allow some slippage in the deficit targets in order to revive the economy. In addition, the increasing problem of cesses is discussed with reference to the Krishi Kalyan Cess to assess whether cesses serve the purpose for which they are introduced.

Lacking in Substance

Budget 2016-17 was presented after the Economic Survey recognised weaknesses in the Indian economy and raised hopes that the government would usher in major changes to enthuse the private sector to invest and grow once again. The dire situation of the rural sector was sought to be addressed through measures to alleviate suffering. Indeed, the slew of announcements sound impressive but, in reality, are quite modest.

Long on Announcements, Short on Intent

The first full-year budget of the National Democratic Alliance government announced a sharp focus on investment, growth and social security. In addition, Budget 2015-16 claims to have given a boost to cooperative federalism. The budget indeed makes numerous impressive-sounding announcements, but stumbles in the details. This article focuses on the attention-grabbing push for investments and finds that the target of Rs 70,000 crore investment may be over-ambitious. As far as devolution of funds to states is concerned, the recommendations of the Fourteenth Finance Commission have been diluted and the states may find themselves short-changed.

Growth, Welfare and Fiscal Discipline

This article looks at the problem of achieving a high growth rate while enhancing social welfare and imposing fi scal discipline. It presents evidence to show by looking at the relationship between various measures of fi scal defi cit and growth that it is the quality of the defi cit that matters for growth. It is important to take into account the quality of expenditure that is reduced to curb the fi scal defi cit, and avoid the tendency to create capital account surpluses for reducing the gross fi scal defi cit. The United Progressive Alliance government has followed this short-sighted strategy all through and the budget for 2013-14 is no exception.

Budget 2012: Tinkering with Subsidies

With major issues confronting the fertiliser and petroleum sector being left untouched, the small reduction in subsidy numbers in Budget 2012-13 is mere tokenism and lacks credibility. However, there seems to be some thinking in favour of direct cash transfers as a substitute for the existing structure of subsidies. It is true that this alternative has its limitations. Just the fact that an alternative is being thought about in the form of pilot studies for kerosene and some initiative is being taken in the fertiliser sector is the high point of Budget 2012-13.

Budget 2011: Veering Off the Fiscal Consolidation Road Map

The overarching message of the government in Budget 2011 was that it was not enhancing the tax burden. It was a revenue neutral budget, claiming to spend adequately on developmental schemes and yet getting back on the fiscal consolidation road map. The verdict, however, is that Budget 2011 seems to be just one more on the beaten track of backtracking on developmental expenditures when in fiscal correction mode.

Bharat Nirman: A Stocktaking Exercise

A prominent feature of Budget 2010, like the previous United Progressive Alliance budgets, is the continued support to the Bharat Nirman - a programme which has come to occupy an important part in the UPA government's thrust on rural development. This article attempts a stocktaking exercise of this initiative, and in doing so, it draws attention to areas where mid-course correction is called for if the increased budgetary allocation is to translate into a de facto improvement in rural infrastructure.

Regional Variations and Impact of Delimitation in Maharashtra

An attempt is made here to bring to the fore the politico-economic dimension of regional variation in Maharashtra and the possible impact of delimitation on the outcome of the 2009 assembly elections. Empirical observation shows that at least on paper, delimitation with its greater weight to the urban centres will benefit the Bharatiya Janata Party-Shiv Sena alliance over the Nationalist Congress Party- Congress coalition. However there is a silver lining for the Congress - the strongest factor in favour of the Congress remains the Maharashtra Navnirman Sena.

Persistence of Fiscal Irresponsibility: Looking Deeper into Provisions of the FRBM Act

While the 2009-10 budget was branded as a lacklustre budget, there seems to be near consensus that it rightly pushed aside the issue of fiscal rules, as growth is the top-most priority at this moment and all else can follow. This paper argues that even if we were to accept this position, the direction and structure of expenditures since the passage of the Fiscal Responsibility and Budget Management Act has been far from "responsible" even when macro caps were being met. The structure of expenditure allocations in the 2009-10 budget appears to be inadequate for a "fiscal stimulus". The time is thus opportune to chalk out a set of "Second Generation Fiscal Rules", which will address the inadequacies that have surfaced during the four-year experience with fiscal rules at the central government level. Prioritising these second generation rules - thus following the gradualist approach - and strengthening enforcement via greater power to the Comptroller and Auditor General, which could play the role of a Fiscal Council, would facilitate greater success of the new rules.

Demonstrating a 'New Political Budget Cycle'

The budgetary allocations for primary education and agriculture - the two apparent beneficiaries from budget 2008-09 - are examined in some detail in this article. In the case of primary education the funds have been directed at programmes that show a track record of underutilisation. In agriculture too, the details reveal that allocations are not on directly productive activities. These covertly disguised allocations on "desirable" components of the budget suggest that there has been "learning" on the part of politicians and we need to watch out for a New Political Budget Cycle.

Education, Agriculture and Subsidies: Long on Words

The opportunity provided by high growth and a comfortable revenue situation to make a serious attempt to boost allocations for education and agriculture has been allowed to slip away. The high priority status accorded to these sectors in the budget speech is not backed by numbers. Instead the numbers have been played around with - such gimmickry only serves to make budgets lose their credibility. Further, the track record of the government fails to inspire confidence that the fiscal targets will be attained. One cannot help but conclude that Budget 2007-08 appears to be long on words alone.

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