The expectations in the run up to this budget ranged from one of fear of pandering to populism to one of announcing major and massive structural reforms. In the backdrop of such a wide spectrum of expectations, the finance minister has shown his maturity and pragmatism in treading the middle path.
At the broadest level, the Union budget is a documentation of the government’s agenda. Viewed from this broad perspective, five things about this budget stand out to me.
First is the determination of the finance minister on prudent management of the economy. Targeting a fiscal deficit of 4.6% of GDP (gross domestic product) for FY2011-12 on the back of 5.1% achieved in FY 2010- 11 is a laudable step. To achieve this will require a rigor in discipline and implementation that we have not seen before. The task will be furthermore challenging in the light of the uncertainty over oil prices in the international market and its consequent impact on our subsidies.
Second is his objective of moving towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG (liquefied petroleum gas) and fertilizers. I have long held the belief that our inability to reach the subsidy to the needy is a bigger problem to solve than the quantum of subsidies per se. Towards this end, this is a welcome step.
Third is continued focus on education that the government sustains. A 24% increase in the allocation to the education sector, a 40% increase in the outlay for the Sarva Shiksha Abhiyan and a slew of one-time grants for various institutions for pursuing different research, signals well for the long-term aim of reaping the full benefits of demographic dividends.
Fourth is the welcome enhancement in the use of technology in the management of government. I am encouraged by the broad-based leveraging of IT (information technology) as envisaged in the budget—be it rural broadband connectivity to all ‘panchayats’ in the country or IT initiatives taken for efficient tax administration, including by CBDT (Central Board of Direct Taxes), CBEC (Central Board of Excise and Customs) or launch of a new scheme to roll out e-stamping in all the districts in the next three years. Given the size and complexity of our nation, we need to maximize the leverage of technology.
Finally, and most importantly, I am happy that the finance minister has acknowledged the challenges we as a nation face from corruption and governance deficit. This is perhaps the first time that these issues figure as part of a budget speech.
Having said the above, we all know that mere intentions are not enough—they have to be followed up with solid actions, appropriate legislations and efficient execution. The government now needs to ensure that this happens. Let’s hope that the minister’s lucky number 3 (this is the United Progressive Alliance’s third budget) and the invoking of extended list of Gods help as well!