A close reading of the >Budget documents reveals at least five big-ticket reforms which the Modi government is planning that Finance Minister Arun Jaitley omitted from his speech in Parliament on Thursday.
The Budget’s fine print indicates reforms in fuel subsidies, Plan schemes and a big push to disinvestment. Had Mr. Jaitley announced these, his Budget would possibly have been hailed as a big-ticket reforms Budget.
The Budget proposes complete decontrol of diesel prices before March 2015 — the gap between the administered and market prices is to be completely eliminated by then. The fine print also indicates that the existing quota of 12 subsidised LPG cylinders per connection per year would be made more realistic. It does not say what the new cap will be or by when the decision will be made. However, this subsidy rationalisation will not be done at the cost of social welfare, say the Budget papers.
The ambitious programme for Direct Benefit Transfers (DBT) for subsidies to be paid directly into Aadhaar-linked bank accounts will continue. Once DBT-LPG is rolled out completely across the 291 districts that had been covered before the scheme was halted by the previous government, it will cover over 7 crore consumers , say the Budget papers.
Budget plans aggressive disinvestment programme
The reforms in the fine print of the Union Budget that did not find mention in Mr. Jaitley’s speech is an aggressive disinvestment programme.
The disinvestment proceeds for this year at Rs. 63,000 crore are higher than the interim Budget’s target of Rs. 56,000 crore. Going forward, the Budget says the government will not be able to rely on dividends of Public Sector Units for revenues as these would moderate due to disinvestment of government stake.
Another major area of reform is the proposed correction in the composition of the Centre’s expenditure so that the bulk of the revenue transfers to the States go into the creation of capital assets rather than operational expenses.
For this, structural changes in plan schemes are proposed. Two-thirds of revenue expenditure must be for capital creation. The names of the schemes and programmes to be overhauled are not specified, but the MGNERGA is likely to be one of them.
The Budget also proposes a progressive reduction in debt to Gross Domestic Product ratio of the government to 41.4 per cent in 2016-17 from close to 47 per cent now. This, it is projected, will reduce the Centre’s borrowings from 3.6 per cent of GDP at present to 2.6 per cent by 2016-17.
