Modi, beware of Manmohan trap

Stocktaking on the Union Budget is a process that usually gets drawn out as more threads and loose ends are disentangled and the governmental knots in the document are untied. Harder look at the general budget text therefore reveals a number subterranean trajectories and overarching tendencies which somehow tend to bind the NDA’s economic vision in the same straitjacket that constrained UPA’s long innings, even though in remarkably different directions. Although Finance Minister Arun Jaitley has laid out a blueprint that stresses fiscal consolidation and tax breaks for the middle classes, there’s a greater pitfall that the budget suffers from which threatens to play out the oft-repeated episodes in the ecopolitical history of this country. Namely, there’s the customary schematic tap-dancing with too many announcements but hardly enough outlay to match the scope and scale needed for effective implementation. The scare over fiscal deficit, admitted at 4.1 per cent of the GDP, is really, as explained by noted economists, a tad overplayed not only by the policymakers and administrators but also by the commentators, for whom focus on fiscal consolidation hung over like Damocles’ sword which excused many a problem with Jaitley’s financial plan. Tax reforms were left at partial alleviation of middle-class woes, with breaks on income taxes and excise duties on electronic goods, but where is the more systematic corporate tax restructuring to ensure more accountability and transparency in the private sector? Moreover, even though retrospective taxation has been put in the back burner with administrative/judicial authority on a case-to-case basis, wouldn’t the heightened dependence on public-private partnership require a more robust regulation of the corporate sector with ample checks and balances?
    It is important to remember that attempts to remove investment bottlenecks and get the pending projects rolling don’t mean falling back on a model that leaves enough room for misappropriation, with monopolistic thrusts usually driving entrenched corporate-bureaucracy nexus. Modinomics notwithstanding, Union Budget’s panacea for revenue generation seems to be less of curing the systemic ailments plaguing the state and economic apparatus, and more of ensuring and letting in private capital at the expense of governmental say. Inasmuch as the slew of Rs 100-crore projects announced in the general budget are targeted at bridging the gap between the haves and have-nots, how can such meagre expenditure allowance ensure even those schemes taking off, let alone executed to the hilt? How does the government intend to tackle inflation, particularly escalating food and fuel prices that have a cascading effect on the entire spectrum of costs of goods and services? Just levying more tax on ‘sin’ items like cigarettes and gutkas wouldn’t suffice for the long-term goal of upping the tax-GDP ratio; just as without showing definitive state initiative and regulatory intent, raising private capital wouldn’t be an easy job, and might not sit well with long-term holistic vision of merging development with growth. It is our sincere hope we don’t see more ad hocism in public spending, this time shorn of even the grand ideals.