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Tuesday, 15 July 2014

BUDGET 2014: OLD WINE IN NEW BOTTLE


Budget Has UPA Marks All Over
Budget 2014 and Reforms

The Budget presented by Finance Minister Arun Jaitley, is in many ways an anti-climax to the BJP’s campaign and the media hype.They offered the moon to almost all sections of the population. But, what they have delivered is a rehash of UPA budgets.

Almost all the media are critical of the budget. ‘Damp Squib’, ‘half-hearted measures’ etc were some of the comments. The same media was all praise for the Govt when the Railway fare was increased. After the budget, the stock markets have started falling. The slid is more than 1000 points in the last few days.

BJP, including the present Finance minister and PM, has been accusing the UPA of inefficiency and incapable of taking decisions for bringing in the ‘reforms’ that are necessary for revitalising the economy and removing the bottlenecks in the growth path.

PM has, on more than one occasion, been hinting at ‘hard decisions’ and ‘bitter pills’ in the run-up to the budget presentation, creating apprehensions in the minds of people and sneaking joy in corporate circles. Apprehensions, because in the Indian context, ‘reforms’ and other phrases, stand for increasing the cost of goods and services the people use in their daily life, by taking away the subsidies. The increase in the Railway fares added to the apprehensions. In the end however, except for a few changes like the FDI in Insurance, Jaitley has chosen to present a ‘please all’ budget, like his predecessor. In fact, in an interview subsequently, Jaitley expected the UPA to support his measures, as he has retained their schemes!

Political Exigencies Dictate Economic Policies, for the Time Being

The reason for this cautious approach may be the coming State elections and also the necessity to please the neo-middle class and middle class who have shifted their loyalty to the Saffron Party this time. However, even while presenting a somewhat routine budget, the tone and tenor of the budget clearly speaks of the intention of the Govt to usher in the long awaited ‘radical reforms’.

‘Reforms’ Means Different Things to Different People

The monopoly media, the corporate ideologues, all have been advocating for long, ‘radical reforms’ as a panacea for tackling the problems faced by the economy. By 'radical reforms', they advocate measures that include curbing the subsidies, thereby controlling expenditure which in turn will reduce the fiscal deficit. They want a host of other concessions, like labour reforms, easy clearance of projects, good infrastructure, scrapping or trimming the land acquisition laws and so on. It is these measures they call the ‘second generation of reforms’, which according to them would take the country on the growth path. The amount saved by cutting the subsidies should be utilised for putting up infra-structure projects, according to them.

But the people at large want reforms that will help them overcome the present harsh life in which they find themselves because of the wrong economic policies.

UPA was Targeted by Corporate and Media not because of the Scams but because it has Outlived its Utility for the Corporate

The real reason for the Corporate’s ire against the UPA was not because of the scams, (scams in any case can be traced to the corporate-politician nexus), but because they failed to continue with the ant-people reforms. With scams affecting the working of the Govt, and the UPA facing one defeat after another, UPA has by all means outlived its utility for the corporate. Therefore the emergence of someone who can fulfil the corporate's requirements was the need of the hour and Modi fit the bill perfectly. The Corporate were hoping for the Modi govt to unleash the much waited ‘reforms' so that their life can become more comfortable, of course, at the cost of the people and the country.

Though political exigencies forced the Modi govt to tread cautiously in proceeding with the anti-people reforms, more corporate friendly proposals may be expected in the days, months and years to come as Jaitley himself has said that this is only the beginning and he has got only 45 days.

The Real ‘Reforms’ the country is waiting for ...

It’s unfortunate that many an uninformed, would also join the chorus demanding ‘reforms’ not knowing that these so called ‘reforms’, would end up in adding the misery of the common people in the form of price rise and inflation, and will in the long run, end in the ruin of the economy.

Our country require world class infra structure developments, poverty alleviation, curbing inflation, creating employment opportunity for the young and so on

For this to happen, we need tectonic shifts in the policy matters to find the resources that are required for, without touching the subsidies that the Centre and State govts are extending to the population.

The following are a few indicative measures a pro-people govt can initiate:

1) Taxing the super-rich more, which step will affect only a few individual , and will not affect the mass consumption, which Jaitley hopes will fuel the economy. The top .01% now owns more than 55% of the resources in the country. 
2) Finding ways and means of curbing the huge black money that is being generated daily and  in circulation in the country. The amount that is stashed outside, is believed to be only a fraction of the Black money inside the country. 
3) Make some efforts sincerely, to collect the huge Income Tax arrears that are pending and effective steps to prevent tax evasion. It’s good that some saner counsel prevailed on the govt to retain Aadhar . This will help plug huge income leakage on many counts, and may save lakhs of crores.

4) Reduce the artificial scarcity created by the black marketers and hoarders by seriously addressing the issue. In this, a start can be made by the BJP state govts. By doing this, BJP can certainly show that they mean business. After all curbing the price rice means more money in the hands of the people and more spending or saving

5) Expand the economy by finding ways and means of increasing the purchasing power of the people, especially the vast majority of the poor. Manufacturing industry should be the base for our economy. Only a strong domestic demand would help the Industry in the long run. The vast resources of land are now lying unutilised and they are in the hands of the remnants of the feudal order. Releasing this natural productive resource and distributing it to the poor, would help reduce poverty, increase the demand for the goods and services, bolster the economy, and will play a decisive role in preventing the atrocities on the downtrodden and women. 
6) Giving priority to SMEs and putting a cap on Monopoly Profits

These can form the basis of true reforms for the country to progress. For this to happen, it requires political will and determination and a govt that has the welfare of the people in its heart.Will Modi Govt bite the bullet is the million rupee question

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