The Hindu : A bold initiative, but crisis in farm sector ignored

Online edition of India's National Newspaper
Tuesday, Mar 04, 2003

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National

A bold initiative, but crisis in farm sector ignored

S. Gurumurthy, All-India Joint Convener, Swadeshi Jagaran Manch, writes on the Union budget 2003-04:

The budget presented by Jaswant Singh for the year 2003-04 attempts to internalise in national economic exercise the idea of India as a global power, and addresses different and difficult areas of national economy, boldly and innovatively. But, it surprisingly fails to respond to the serious crisis in the farm sector and just pays lip service to generating employment. The most significant aspect of the budget, which seems to have gone unnoticed in the traditional analysis of the budget, is that it demonstrates the increasing confidence of India as an emerging economic power. While this dimension is diffused in the entire body of the budget, it is explicit in the assertion of the Minister that the time has come for us to review our dependence on external donors and that we would not accept any `tied aid' from any donor countries.

The Minister also promises to help the less fortunate countries by providing aid and debt relief. The concept of India Development Initiative announced by him indicates the beginning of the geo-political and economic agenda of India as an emerging power. This is also a telling departure from the budgetary exercises of the past, particularly those undertaken by the Congress and the United Front Governments at the Centre to appeal for foreign investment in budget speeches, which tended to turn the nation foreign-dependent in its psyche.

For any nation to recover and realise its basic strength and potential, the first condition is self-confidence. Receiving foreign aid and generating national self-confidence are mutually contradictory. Also, a country which receives foreign aid cannot hope to get foreign investment on business terms. It is heartening that Mr. Singh seeks to address this important aspect of global and national psyche. It is evident that his stint as Foreign Minister appears to have shaped his mind on a global agenda for India as part of the internal budget making process. He deserves to be congratulated for this vision and initiative to give a global focus as part of the national economic exercise.

Added to this is the fact that as a nation we are suffering from plenty on the external front, with continuously increasingly dollar reserves, again a matter of national pride. Also, in this budget, there is no special solicitation of foreign investment for Indian survival, a regular ritual in our budgets in the past that tended to make the national psyche anaemic. What a difference from the attempts to undersell the nation for soliciting foreign investment that marked the budget exercises for nearly most of the 1990s.

It is unfortunate that most of the commentaries on this budget have missed this crucial point. In the larger interest of building national confidence the media will have to highlight this aspect of the budget for 2003-04.

Now going into the budget as an annual economic exercise, given the constraints imposed by geo-politics and global economic conditions, Mr. Singh has done well to address the different and difficult issues concerning national economy. He scores high marks for his leap in imagination. Particularly, his initiatives in the fields of physical infrastructure such as national and rural roads, railways, airports and seaports are marked by innovative ideas about financing which is the most difficult area of infrastructure building. His agenda for public health, health insurance for the bottom of the Indian pyramid, housing and education and also the extension of the Antyodaya programme for another 50 lakh below poverty line (BPL) families deserve to be welcomed. But with a caveat, their success lies in their implementation.

The steps to bring down the interest burden on the Government by leveraging the low cost foreign exchange reserves for the high cost foreign exchange loans, and the replacement of the old high cost loans of the Central and the State Governments shows the signs of confidence in national economic strength. Fully carried into effect, this has the potentiality to correct the fiscal imbalances considerably.

The measures announced for reducing the cost of credit to agriculture and to try franchise-lending to extend credit to agriculture are both innovative and bold. The administrative reforms in the field of direct and indirect taxes are in keeping with the times, but the reduction in the average customs tariff to 25 per cent appears to be clearly motivated to satisfy the lobbyists for globalisation.

But the Minister has surprisingly failed to address the crisis in Indian agriculture, and on top of that, the increase in fertilizer prices rubs salt into the wound. This is when every country in the world is increasing, not cutting its subsidies for farmers. With the much talked about Indian agricultural agenda failing in the WTO, the state has to play an active role in preserving our agriculture. So, the budget needs review in this regard.

Also, the cotton textile industry, intimately linked to agriculture and employment, has been dealt with without regard to the present condition. The only way the cotton textile industry can be brought to shape is to remove all input excise on cotton textile items for a period and that would alone ensure re-consolidation within the industry. The Minister would do well to reconsider his decision to extend the modvat chain to the powerlooms and think of the alternative suggested. Cotton textile is too sensitive an industry to be handled like any other industry.

The de-reservation of 70 items in the SSI list seems to ignore the consequences flowing from that and does not seem to internalise any provision for calibrating and absorbing such consequences. The most glaring omission in the budget is any specific measure to promote employment. This is more glaring, particularly in the background of the commitment of the Prime Minister to generate a million additional jobs every year. The introduction of VAT at this stage seems to be clearly premature. With over 2/3 of the economy un-organised and un-banked, the introduction of VAT now will create chaotic confusion. This is particularly undesirable when the industrial economy is picking up.

It is hoped that Mr. Singh will address these crucial areas and complete what is certainly a bold and innovative budget-making exercise in recent times.

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