Emphasising ‘Inclusive Growth’

On Monday, July 6, Finance Minister Pranab Mukherjee presented in Parliament the UPA Government‘s full Union Budget for 2009-10 that envisages the highest total expenditure of Rs 10,20,835 crores with a yawning fiscal deficit which is to rise from 6.2 per cent in the Interim Budget to 6.8 per cent. The Hindustan Times headline—“Finance Minister bets on ‘aam aadmi’ for growth, holds out promise of reforms”—sums up the essence of the budgetary exercise. The Asian Age also aptly characterises the Budget as marking a “deepening and broadening” of the UPA’s social inclusion agenda, adding:

Never before has the government been so emphatic about its resolve to see a change in the vast hinterlands. To this end, allocations made under various programmes have been gigantic.

The mounting expenditure in the Budget is intended to raise employment, increase household surpluses, widen consumption and hence production—the focus of the expenses being on the building of rural infrastructure, creation of jobs through the 144 per cent rise in the NREGA funding as well as execution of major projects as ports, airports, roads and railways.

The Hindu compliments the Finance Minister for the stress he has laid on inclusive growth and observes in its characteristic cautious style:

The widening deficit certainly poses a major risk but it is a risk taken in pursuit of the broader objective of inclusive growth and may well be politically justifiable.

These words are more significant than the bloodbath in the bourses as also some of the sharp criticisms emanating from the corporate sector which, despite the abolition of the Fringe Benefit Tax (FBT) and commodity transaction tax, is broadly disappointed because of the absence of the anticipated bold economic reforms, among them greater relaxation in the FDI regime and a more aggressive disinvestment programme (as had been hinted in the Economic Survey 2008-09 released on July 2), in Pranab‘s Budget.

Like this year’s Union Budget, the Railway Budget—that was presented in Parliament by Railway Minister Mamata Banerjee on Friday, July 3—had no big-bang announcements and, as The Asian Age perceptively noted, it was “more like a thanksgiving speech... full of political overtones and populist measures”. The Railway Budget too was heavily loaded in favour of the aam aadmi even as the industry was kept in good humour by giving considerable scope for public-private partnership (PPP) projects with Mamata insisting that the railway ventures should be based not only on economic viability but also on their “social viability” and making it abundantly clear that the Railways, as the country‘s largest employer, must “set an example of inclusive growth”. In that very spirit she unveiled her “izzat” scheme: a Rs 25 monthly pass for travel up to 100 km for those earning up to Rs 1500 a month, this being testimony to her concern for those at the lowest rungs of the socio-economic ladder while vindicating her assertion before presenting the Railway Budget that her proposals would be “for the people and of the people”.

Keeping passenger and freight fares untouched she announced not only the “izzat” pass for members of the unorganised sector but also 57 new trains (predictably many of them in West Bengal); while she could not disclose several new projects for want of clearance from the Planning Commission, these are to be declared in due course.

Mamata’s thrust in her Railway Budget has been on improving passenger amenities and providing better security. There is also the promise of early implementation of ongoing projects. “While there is nothing particularly striking in this (Railway) budget, there is much to be said for keeping a good performance going,” writes The Hindu. The Statesman goes out of its way to laud the plans to introduce special coaches for the physically challenged and the old, the proposal on doctors on long-distance trains and railway ambulance services in seven cities as “truly benevolent and caring moves” but simultaneously charges both Mamata and, more pointedly, the Railway Board with indifference on the state of the railway tracks while announcing the introduction of non-stop Duronto (restless) train services from Kolkata to Delhi, Mumbai and Amritsar, and concludes that the Railway Budget “mirrors a misplaced concern for frills rather than fundamentals”.

Both the Union Budget and Railway Budget would be more thoroughly dissected and their real lacunae exposed in the coming days inside Parliament and outside. However, the irrefutable fact that these reflect the UPA II’s anxiety to ensure “inclusive growth” at all levels has brought out the basic importance of both the exercises.

8 July S.C.