'A Second Car or a Holiday Abroad...?'

In the weeks ahead of the presentation of the union budget for 2008-09, the question dominant in the financial media was if this was going to be an “election” budget. That perspective with all its bias about what giveaways are populist and what are incentives pre-determines the final assessment. The more appropriate yardstick by which to appraise Budget 2008 is to ask if it will contribute to broad-based growth, or make growth “inclusive” as the new mantra calls it. The answer must be that the union finance minister P Chidambaram’s fifth successive budget is much like his earlier efforts. Budget 2008 is filled with all the right kind of symbols but in the end it does nothing to spread the fruits of growth. The United Progressive Alliance government will end its tenure by overseeing the most rapid rate of economic growth in post-Independent India but with a record of having done substantially little to take the benefits of this acceleration outside the growth enclaves.

The cleverness of budget-making in the post-reform years has always been to show that there is a little bit for everybody even as the government continues with its familiar policies to accelerate growth. Budget 2008 has all of that and more. It projects the right numbers – according to the Fiscal Responsibility and Budget Management Act – on the revenue/fiscal deficits, even if it avoids making provision for the Rs 60,000 crore farm loan waiver and the recommendations of the Sixth Pay Commission. It has offered significant excise duty cuts to Indian industry to meet fears of a continuing slowdown. It has made small to large increases in the outlay of a number of social and infrastructure programmes such as the Integrated Child Development Services and Bharat Nirman. And, most important of all, it claims its Rs 60,000 crore loan write-off will benefit 40 million farmers in rural India, which for the past decade has languished in “shining” India.