“Vel Anru Venri Tharuvathu Mannavan
Kol Athuvoom Kodaathu Enin.”
(Not the spear but sceptre swayed with equity
Alone gives the ruler victory.)
The Finance Minister namely; Mr. P. Chidambaram presented the last budget for the current UPA tenure two days back. The last budget of any outgoing government is an interim budget, which is in effect for merely till the time the incumbent government leaves the office, due to which not many significant changes were expected. However, the Finance minister tried his level best to grab the attention of as many voters as possible for the upcoming elections with as few populist measures as possible such as one rank one pension for military personnel and the education loan subsidy to clean up the bank loan. What was noteworthy was the bold move undertaken by the FM by decreasing the excise duty of all segments across the automobile industry by 4-6% in an attempt to revive the automobile industry. Although the news was hailed by auto industry and investors alike, skeptic critics termed it as an end result of ubiquitous lobbying.
As Indian budgets tend to be, this too was packed with dramatic hyperbole statements, with the most apt example being the aforementioned couplet by Sage Thiruvalluvar. In all probability the words were a potshot at his fellow competitors, while pointing out not-so-subtly, UPA’s achievement over the years. The FM in order to back his point, narrated the attainments of UPA over the last 10 years.
The most important of all points in the speech, which the FM was exceptionally proud was the Fiscal deficit and the CAD figures. The FM proudly pointed out that he had contained Fiscal deficit at 4.6% of the GDP and the current account deficit stood at $45 billion. However, the ends doesn’t justify the means. The ways used by the FM to achieve those figures were criticized by experts, who pointed out that the FM had merely rolled over some expenses and slashed planned expenditure.
Merely altering rates of taxes, clearing projects and reducing expenditure cannot get out the economy from the dump. Fundamental changes such as introducing GST, DTC and IFRS along with privatization is the key to fiscal consolidation. The FM has quite clearly failed to address these issues. However whether or not he has managed to convince the people of India to stick to his party remains to be seen.