Editorial
The recent budget (really a vote on account) was an
eye-opener for the Indian public. Unlike normal budgets, this budget was not
cluttered with the baggage of numerous amendments to various laws, and therefore
the focus was on the budgeted figures and the actual figures for the current
year. The budget was also in the focus on account of the fact that the world
economy is in doldrums, and people were keen to know the actual impact on India
so far.
A budget is supposed to be an estimate of and a guide to
future spending. In the corporate sector, employees are taken to task for
exceeding budgeted figures, which are regarded as sacrosanct. In the context of
the Government of India, budget figures of expenditure have always been
exceeded, though normally only by a small percentage. This year being an
election year, the budget seems to have been thrown completely to the winds.
According to the estimates, the revenue deficit as a proportion of GDP for
2008-09 will be 4.4 times the budgeted figure, while the fiscal
deficit will be double the budgeted figure.
This is only the disclosed figure. If one factors in the oil
bonds and fertiliser bonds issued, which are off-budget items in the year of
issue but show up only in the year of redemption, the actual deficit is much
higher. Is there any sanctity to the budgeted figures, or is it just something
put together for public consumption because it is required by statute ?
What does this reflect ? It reveals the lack of importance
our political leaders attach to the budget process, and their sheer disregard
for all consequences to the economy in an election year.
The profligacy of politicians in power in the last few years
has ensured that the advantages of buoyant tax revenues from the booming economy
have been frittered away in good years, without saving anything for the bad
times. Now that the economy is going through a bad patch and the time has come
for the Government to spend freely to revive the economy, the Government would
obviously find it difficult to find the funds to do so.
The problem has been compounded by the fact that from the
date the election schedule is announced, the Government is totally paralysed,
and prevented from taking any major policy decisions. Most economists are
unanimous in their view that a slowdown or depression of this nature calls for
swift and decisive action by the Government. The world over, governments are
taking drastic decisions almost every week to hold up their economies. A
recession of this nature calls for concerted efforts of all governments in a co-ordinated
manner. We have the double disadvantage of a Government taking decisions from an
election viewpoint, rather than from an economic perspective, followed by a
period of indecision. Further, it seems unlikely that the elections will give a
mandate to any single political grouping. So, even thereafter, the new
Government is likely to be swayed in its decision-making by political necessity
arising out of its alliances with different parties with differing views, rather
than by economic commonsense.
In that sense, one can say that if India continues to grow,
it would be in spite of its political leaders. Our growth and prosperity would
have been significantly higher if we had leaders of the right calibre, who truly
had the national interest in mind above everything else. One wishes and hopes
that the recent public awakening witnessed after the terrorist attacks, results
in emergence of a new and better political force, which, through the sincerity
and honesty of its purpose, could help this country achieve its true potential !
Gautam Nayak
