Commentary/Mani Shankar Aiyar

Chidambaram has become the first finance minister in 50 years to think that Budgets are for the rich

What is required to ensure a high growth rate is not merely tax reductions, but a much stronger commitment to providing infrastructure and power.

It is disgraceful that the central plan outlay in 1996-97 has been Rs 100 billion less than the budgeted outlay. Worse, compared to last year's Budget outlay, the central plan shows an increase of only six per cent, which is lower than the current inflation rate. Therefore, the finance minister is, in effect, proposing stagnation in development outlays.

The Budget thinks nothing of stagnation in central plan outlay affecting the prospects of income and employment for the poor. Nor is Chidambaram bothered about inflation continuing at near-double-digit figures -- and that too, at twice the rate at which prices rose during Manmohan Singh's last year in office.

Worse, apart from the pious promises, the finance minister has done nothing to control the spiralling food prices. If the revamped public distribution system is the answer to runaway inflation on the food front, then it is significant that the finance minister has not made provisions for the huge additional expenditure required to finance this dodgy new scheme.

Chidambaram gives the impression that he has not considered the consequences of the Pay Commission recommendations at all. But this is actually to fudge the figures and claim that the fiscal deficit has been contained within the five per cent target. In fact, all the finance minister has done is to postpone the day of reckoning. This is not a budget but a self-deluding optical illusion, he has presented.

That being so, what the finance minister is hoping to get away with is a 'monetised deficit,' of Rs 160 billion. This will be the largest provision for printing money in our financial history. Given all the expenditure which the government will have to undertake, and which Chidambaram has hidden from sight by aningenious sleight of hand, the actual magnetised deficit this coming year is going to be much, much larger. Since the currency printing leads to inflation, the burden of Chidambaram's 'Monopoly' game will land (where else?) on the poor by way of spiralling prices.

Thus, this is an uncaring Budget -- the finance minister has protected the rich and exposed the poor.

Chidambaram has explicitly taken as his model the Tigers of South-East and East Asia and had the gall to actually say, in an interview to The Times of India, that he intends to make India an 'Asian' country! There is simply no objective basis for imaging that whatever works elsewhere will -- or should -- work here. We have to find Indian solutions to Indian problems. We should not become a pale imitation of someone.

All those 'miracle' countries are, or have been, authoritarian states. Some, like the Philippines and Thailand, tolerates social inequalities which have no parallel in our democracy; Others, like Singapore and Hong Kong, are city states with virtually no rural or agricultural populace. And most of the larger ones -- China, Indonesia, Malaysia -- are abundantly endowed with oil.

We have a great deal to learn from each of them. But if we start chasing the chimera of becoming one of them, we will certainly end up losing our democracy and fundamental rights. We will probably end up generating so much social tension as to threaten our integrity and, thus, our cohesion and independence as a nation.

Manmohan Singh's so-called new economic policy drew its sustenance and justification from past successes. It was because past policies had nurtured, expanded and diversified entrepreneurial, technological and managerial talent to its present level of maturity that liberalisation proved possible. But the budgetary resources so saved were diverted to the twin areas of poverty alleviation and human resource development -- specially, education, health and women and child development.

This Budget chases the Holy Grail of someone else's model -- and does so on the basis of unrealistic, even dishonest, assumptions. Chidambaram has become the first finance minister in 50 years to think that Budgets are for the rich.

The poor will have to pay a heavy price for his illusions.

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