KARNATAKA DRAWS A BLANK
The decision of the Finance Minister and the UPA government to waive Rs 60,000 crores of farm loans is an election year gimmick that smacks of populism. Rather than reform agriculture to make it more market driven, encourage research and development, the government has chosen the easy way of loan waiver scheme with intentions of capturing the votes of farming community in the coming Lok Sabha elections. Much needed farming reforms could have been enacted in the current budget that would have improved farm incomes, escalated agriculture growth to 5%, making agriculture more vibrant in the country.
Instead, the government has chosen a populist measure to waive loans of farmers and project that benefits might likely reach four crore poor farmers. But the data and experience of the last farm bailout portrays a completely different picture. The last loan waiver scheme of Rs 10,000 crore orchestrated by the then Agriculture Minster Mr. Devi Lal along with the Minister of Finance Mr. Janardhan Poojary was termed as a big failure by many farmers and research scholars, since it never reached the intended beneficiaries. Instead it became a grandiose distribution to political cronies and party workers of the party in power. Lok Partiran feels the result this time around will likely be the same, with political cronies and party workers likely to siphon off major portions of the funds, with very little of the benefit reaching the poor farmer.
Contrary to Finance Minister's claim in the parliament about sound fiscal shape of the country, India's fiscal deficit is one of the highest in the world and the government finances are the worst amongst the BRIC (Brazil, Russia, India and China) countries. The budget presented by the Finance Minster in the parliament projects revenues of Rs 6,02,935 crores and revenue expenditure of Rs 6,58,119 crores projecting a total fiscal deficit of Rs 1,33,827 crores. These figures are a farce since it does not include subsides to Oil and Fertilizer companies. The government uses the Provident Fund account and Consolidated Fund of India (CFI) to make provision for these bonds, which is a terrible practice. While acknowledging this fact in the speech, Mr. Chidambaram again chooses convenience over good practice.
The overall debt position of the country is staggering and currently stands at more than 75% of the GDP and is a major source of weakness for finding much needed resources for development. The high debt ensures that interest payment makes up a major portion of the government expenditure. The current interest payment of Rs 1,90,807 crores indicates that Rs 60,500 per second is being added to the debt of the country. With sixth pay commission report due at the end of March 2008 and given that all political parties are in election mode, the government will be under enormous pressure to implement the recommendations. If the recommendation is anything like the last one – an increase of 30%, a massive burden will be imposed on both the central and state government finances that does not bode well for the debt position of the country.
With revenues buoyant, it would have been a sound fiscal move if the finance minister had indulged in the reforming of government subsidies. During the recent petrol and diesel price hike, even the left parties indicated that government should reform oil subsidies. Fertilizer subsidies could have been reformed with a start being made to direct the benefits directly to the farmers rather than route through state owned companies. With no respite in the rise in oil prices and urea prices in the world commodity markets, the government will have a very difficult time to contain the 2008-09 subsidy bill to the stated amount in the budget.
Reforms have also stagnated in the much needed infrastructure and power sectors of country. The Finance Minister has done very little in the budget to provide a fillip to these sectors. Roads need to be developed at a much faster pace than the current one and power shortages in critical industries are stifling growth in critical industries. An enactment of reforms in these sectors would have made people more optimistic about the Finance Minister's overall economic growth projection.
Finally, the Karnataka unit of Lok Paritran is appalled at the negligence of UPA government of the needs of the state in both the Union budget and Railway budget. Many measures were announced in the budget that focused on most unproductive states, while a very productive state like Karnataka is ignored and starved of central government resources in its quest for developmental. The Union government could have benefitted from the goodwill of people with a
sanction of an IIT in North Karnataka or housing scheme for Dakshina Karnataka. Lok Paritran if elected in the coming elections promises to fight these disparities and bring more development funds to fulfill the aspirations of the people of Karnataka.
Note: Karnataka Unit of Lok Paritran will make a detailed analysis of the Union Budget in the coming week.
Government of India online Grievance Cell : http://darpg-grievance.nic.in/
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Corrupt, useless and inefficient people are elected by the GOOD people
of the nation BY NOT VOTING !!
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Lok Paritran, Karnataka State Unit
15, Wood Street, Ashok Nagar,
Bangalore - 560025
98455 97452, 98440 04439
www.lokparitran.org
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The difference between what we do and what we are capable of doing
would suffice to solve most of the world's problems.
Be the change that you want to see.
