Union budget to focus on booming economy, greater social needs
New Delhi (AsiaNews/Agencies) – Agriculture, health care and education are India’s top priorities as the Union finance minister unveils his government’s budget for the coming fiscal year. Lowering inflation also remains an important goal especially since it disproportionately affects hundreds of million of people at the bottom of the social scale and has cost the governing coalition elections in two states.
In presenting the budget Finance Minister Palaniappan Chidambaram said India had to achieve food self-sufficiency, help the poorer segments of the population and fight inflation.
Thus, India is at a crossroad. On the one hand, it has had 8 per cent growth for the past three years. On the other, the price of a booming economy has been high inflation (6.7 per cent last month).
Rising prices for food and basic necessities have disproportionately affected the poor in a country where two thirds of the population still lives with less than US$ 2 a day (more than 300 million with less than one dollar), a country that has 150 million unemployed but also where 20 per cent of the population already enjoys annual incomes of US$ 10,000 and more. In Mumbai slums exist side by side posh residential areas where flats are almost as expensive as in Manhattan.
Although the government realises that services and infrastructure such as roads must be improved in order to attract foreign investment, this has not prevented the ruling coalition from biting the dust in recent elections in two out of three states.
The budget will lower the cost of credit to farmers (two thirds of the population), focusing on improving production and irrigation. This way, at least five million farmers will be brought into the banking system. This is particularly important since a lack of adequate, affordable credit has prompted a wave of suicides amongst farmers across rural India.
The rate of growth in agriculture has been less than 2 per cent compared to about 10 per cent for the manufacturing sector in the last three years. Hence excise duties on fuels will be reduced and import duties on non-farm products will be lowered from 12.5 per cent to 10 per cent.
The finance minister expects spending on education to increase by 34.2 per cent in the coming fiscal year. New money will go to improve what in many ways is a dysfunctional school system, hit by teacher absenteeism and high drop-out rates in public schools and high costs in private schools. None the less, critics remain sceptical about getting any significant returns on heavy investment in education given chronic problems of accountability in public services.
Extra money will go for "socially and educationally backward classes" and new scholarship schemes. Spending on health will also rise by 21.9 per cent.
The government has set aside Rs 1.34 trillion (US$ 30 billion) for infrastructure development (roads and power stations) next year, but that is not enough for many experts.
For Nasser Munjee, chairman of the Development Credit Bank, India needs to spend something like US0 billion a year to catch up with what the economy really needs and attract private investment in infrastructure. Increasing excise duties on cement and higher taxes for telecoms firms are not going to help.
However after all is said and done, in India elections are largely won or lost on the price of onions (up 200 per cent in last four months), which explains why, earlier this week, the ruling Congress party lost power in Punjab and Uttarakhand. In Punjab the opposition Bharatiya Janata Party took 44 of 116 seats; in Uttarakhand it won 34 out 69 seats.
Observers are unanimous that higher prices for wheat, sugar, cooking oil and other food staples played a key role in the Congress Party election losses.
In the last ten years at least two Union governments fell because of inflation. And in April, voters in Uttar Pradesh, which sends a seventh of all lawmakers to the national parliament, go to the poll. (PB)
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01/03/2006
07/04/2016 18:12
