The Budget : More Tokenism

More Tokenism Madhav Godbole writes:
UNLIKE elsewhere in the world, the presentation of the annual financial statement of the government has become a media event in India. The other striking feature is the influence which the chambers of commerce and industry seem to wield as compared with the contribution of the sector to GDP. India Inc is in evidence for weeks preceding and following the budget. Now that all the media hype is over, it is time to take stock where the budget presented by Yashwant Sinha has failed the country. The ingenious arithmetic used to artificially bring down the estimated fiscal deficit for the year shows the inability of the government to address complex issues. The interests of the states and the centre are diametrically opposite so far as mobilisation of small savings (SS) is concerned. Small savings is a major resource for funding the annual plans of the states. However, the centre has been keen on keeping its fiscal deficit low. As a result, a number of disincentives have been introduced, from time to time, to bring down SS. This conflict of interest has to be addressed, if the interests of the states are not to be undermined. Merely leaving the SS out while computing fiscal deficit will not be enough.