With not much room for maneuvering in an interim budget, Union finance minister P. Chidambaram presented essentially an election budget but without the sops that would have created some frisson with his foreign investors. With his eyes on the elections and his party’s strong opponents like Narendra Modi who have constantly hit out at the UPA government for its inaction and bringing the economy on the brink of disaster, Mr Chidambaram presented a flashy, fluffy report card of the UPA I and UPA 2 government’s achievements even whilst rejecting strongly the accusation of ‘policy paralysis.’
He flaunted the fact that GDP growth was better than in the last 33 years when it trended at 6.2 percent and his government achieved 6.8 per cent since 2009. The fiscal deficit he said would be maintained at 4.6 per cent much below his lakshman rekha of 4.8 per cent, and the revenue deficit at 3.3 per cent. The other achievements he trotted out was contracting the current account deficit, moderating inflation, stabilising the rupee, giving licences to new banks, bringing in the New Companies Act, land distribution to the scheduled tribes and schemes for the scheduled castes, minorities, and women and child welfare and enrolling 1,58,403 crore youth in the national skill development programme.
He papered over how he would reduce the fiscal deficit and its quality has always been dubious since it evolved getting huge dividends from the public sector units and banks and even asking the RBI to transfer its surplus ahead of schedule to shore up his coffers. In the case of the current account he did mention that imports needed to be reduced and exports increased.
To his credit it has to be said that he has given a small boost to manufacturing with generous excise duty cuts to the auto industry that got more than it had asked for, and excise cuts to the capital goods and mobile phone sectors. Refigerators and other white goods will become cheaper and one thing good about Chidambaram is that he sees the reductions are passed on to the consumer.
All in all a good interim budget that ended with a message to his opponents who were told that governance is not about populism, majoritism, and individualism.
