With a full majority in Lok Sabha election 2014, it was expected that NDA will make a political budget, keeping in view the promises made to the voters. By doing so, the economic rationality was somewhere missing when the 35 pages budget speech kept on announcing schemes for almost every segment of the economy and society.
Besides the fact that the minority communities are disappointed by the budget; there are few announcements that deserve appraisal by the public. The Good Budget for 2014-15 contained some of the popular declarations as below –
1. The policy to introduce FDI in selective sectors will certainly help promoting income and employment opportunities.
2. Allocating additional Rs. 12,000 to National Housing Bank with object to facilitate credit flow for housing in rural and urban areas along with incentives in loan for housing will help real estate sector get momentum.
3. Linking wage employment under MGNREGA through works that are more productive, asset creating and substantially to agriculture and allied activities will certainly help improve the livelihood of rural Indians.
4. Proposal to start new programme called “Neeranchal” for watershed development in the country, will help horticulture.
5. Proposal of five more IITs along with Five IIMs would help developing skill in the country.
6. Launching of Kisan TV is a good move to push the farmers upward.
7. The proposal to establish a Rs.10,000 crore fund to act as a catalyst to attract private Capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies will certainly help MSMEs get financial support.
8. Setting up of 6 more mega Textile clusters will help promoting textile industry.
9. Opening up of Insurance and defence for foreign investors will help India reduce cost of defence and manage better insurance sector.
10. The proposal to increase personal income tax exemption limit by Rs. 50,000 that is, from Rs. 2 lakh to Rs. 2.5 lakh in the case of individual taxpayers who are below the age of 60 years will certainly please small taxpayers.
While the above announcements are genuinely popular declaration, there are many announcements making it a politically motivated budget. NDA has tried renaming many existing schemes just to give the schemes saffron colour.
Considerably the Modi government has clearly neglected the need to focus on development of Minorities through budgetary provisions. The scheme for modernisation of Madrasa can only address 4% students of the Muslim community. Moreover, the route to allocate fund creates confusion in implementing the plan. This plan needs review and discussion with expert panel of managers and Trustees managing top Madrasas in India.
The programme for the up-gradation of skills and training in ancestral arts for development for the minorities without any allocated fund has no meaning. There is no plan to address the difficulties faced by Minorities to move on development path. No remark is made to cover the deficit of Muslims in educational and economic front. No comment on financial exclusion resulting in economic blockage and backwardness to the community.
The team set the budget continue making the same mistake to carry forward the deficit by inviting more debt funds to bridge the revenue deficit. The government will spend as much as 24% of total receipts on just interest payment on loan borrowed for budget deficit. As a result NDA is not in a position to spend more than 15% on subsidies to facilitate the poor have necessary items for consumption and production.
As a result of excessive focus on debt loans compared to equity funds to match deficit budget, the Modi Government needed to increase tax revenues. The pressure to increase tax revenues caused additional cost of production (with more custom and excise) and more sale prices with added Sales Taxes. These all will ultimately increase inflation pressure and create mismatch in demand and supply forces.
Had the Modi government been wise enough, it could have proposed more infusion of equity and lease based investment for infrastructure developments in roadways, shipping, power, solar energy, transportation, airports, telecommunication and railways so as to reduce debt burden and interest payment on debts for coming years.
We hope that as the Government has already announced its willingness to examine other suggestions that would spur growth in this housing sector. The Modi Government would induce discussion and debate with experts of alternative finance model for developing alternative mode for investment and finance in housing and insurance sectors. There could be new financial products like lease finance, Diminishing Partnership Finance and Mutual Risk Subscription Funds to boost housing, vehicle, heavy machine and insurance sectors without adding additional burden on the Government.
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