Tuesday, March 10, 2015

Budgeting : An art of the possible

A finance minister’s job is inevitably cut out, that with having to revive growth momentum, contain the prices of essential commodities and alter the growth pattern to ensure gainful employment remaining at the top of the agenda. 

But choosing between mindless populism and fiscal prudence also led Union finance minister Arun Jaitley to deny the North-east its share of the “budget cake” even if 
Prime Minister Narendra Modi had generated much hope among the people there.

What has actually left a large number of North-east watchers surprised is that perhaps for the first time the budget did not even pay the minimum lip service to the northeast.
However, New Delhi denies that the budget ignored the region, with the cross argument suggesting it would benefit from proposals like the setting up of an All India Institute of Medical Sciences in Assam, an Indian Institute of Science Education and Research in Nagaland and a Centre for Film Production, Animation and Gaming in Arunachal Pradesh.

As mentioned earlier, ours is a country of populism and freebies. The more the government gives, the more eager will people be to grab more — preferably free of cost and without hard work. Sadly, people in the North-east are no exception. The patronising cult of politics let loose for decades by the Congress at the Centre has actually spoiled them, as is evident from the harsh impact of a dilution of the work culture and the propensity to engage in corruption and nepotism.

To be fair, the North-east states have their own problems — some inherent, some manmade and some imported from Lutyen’s city. Which would suggest the need for an extra push, a point highlighted by the Prime Minister and Jaitley from time to time. In the fitness of things, therefore, Union railway minister Suresh Prabhu and Jaitley would have done well to appreciate that the North-east has its own limitations and peculiarities.

Thus, given the pros and cons of the General and Railway Budgets for 2015-16 with regard to the region, no one seems willing to walk the talk even as both Prabhu and Jaitley have tried to shun populism and tread a long-term road map. For his part, Prabhu, a chartered accountant by profession, did an auditor’s job in text book fashion. 

The roadmap for the railways, after many years, is on running the enterprise efficiently. Instead of announcing new railway lines, he focused on taking a quantum leap on increasing revenue, evoking positive reactions from the industry and private investors who found his proposals “more of a business-like document”.
With regard to the North-east, he was happy that Arunachal Pradesh was now on the railway map and also that several pending projects, including the broad gauge line in Barak valley, needed to be completed.

For his part, Jaitley, suave orator that he is, started on the right note, striking the right political notes about the Modi government’s cooperative federalism. “We have embraced states as equal partners in the process of economic growth. States have been economically- mpowered more than ever before,” he said, while stressing the need for accelerating development in the eastern and North-eastern regions, which, he said, were “lagging behind in development on many fronts. 

We need to ensure that they are on par with the rest of the country”.
This was, among other things, endorsed by the Prime Minister in no unambiguous terms. “The budget indicates our commitment to ensure that development of Eastern and Northeastern India gets an impetus and drives future growth,” he tweeted within hours of the budget’s presentation.

Given the ground reality though, both Prabhu and Jaitley offered the region precious little. Predictably, while Assam chief minister Tarun Gogoi, otherwise facing a tough election next year from the BJP, said the budget was “pro-rich” and contained nothing for the Northeast, with the Assam BJP claiming both budgets were “a break from tradition”.
Said Assam BJP spokesman Shiladitya, “The days of announcing new trains and electionfocused rail budgets, both Congress traits, are over. The Railway Budget only proves the Prime Minister’s commitment to improving rail services through reform... similarly, the General Budget from Jaitley, also laying thrust on reform and long term vision, will go a long way to help the North-east.”

The electoral fray in Assam is becoming more curious by the day, as in the recent municipal polls the BJP put up a commendable show and, importantly, this came within days of saffron outfit facing an unprecedented drubbing. In fact, despite the Arvind Kejriwal juggernaut in Delhi, the BJP swept the municipal polls, winning 340 wards and mustered a majority in 30 municipalities.

Which brings us to the debate on fiscal prudence as enunciated by the Modi government in its first full budget. First, it has played to the hilt the phrase “cooperative federalism” and, going by the 14th Finance Commission report, has almost decided to do away with, or at least dilute various provisions of the “Special Category states” norms.
By this, the North-east will be back to the Fourth Plan mechanism wherein developed states got away with certain advantages. This is not for the first time such a stricter financial mechanism is being mooted. 

In the late 1980s and 1990s, the recommendations of the Ninth Finance Commission, headed by Congress leader NKP Salve, had left the North-east states in anguish.
In other words, the development challenges in the region will perhaps now be taken care of by the generalised approaches applied in the rest of India. This uniform yardstick for development, as also underlined in the creation of Niti Ayog, has been opposed by Tarun Gogoi and Mizoram chief minister Lalthanhawla. Chief ministers and planning ministers from other North-east states also have similar arguments. 

Their refrain is that no attempt has so far been made to appreciate the development issues of the region in a way different from that in the rest of India. They fear the Prime Minister’s stress on shifting from plan to market economy will benefit big industrial states like Gujarat and harm small and backward ones like Assam or Mizoram.

The apologists say that even though the usual projects and special concessions have not been made, Jaitley did announce a number of initiatives with longterm implications to help the region.

Announcement of a project development company in manufacturing hubs in Cambodia, Myanmar, Laos and Vietnam through separate special purpose vehicles to catalyse investments from the Indian private sector, they say would boost and redefine trade and commerce between the land-locked northeastern states and other Southeast Asian countries.Many are already describing these as special moves to put in place the Act East policy of the new dispensation headed by the Prime Minister. 

The taste of the pudding is in the eating, but as the new time space envelopes the Asian and global economy, perhaps it's relevant also to think differently on how one should eat.  Perhaps it’s relevant to develop an art in eating than the pudding itself. 


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