Aam Aadmi Party’s Response to Union Budget 2013

Date: 28.3.2013

Aam Aadmi of the country has reasons to feel disappointed, if not cheated, with the Union Budget 2013-14 presented by the ruling coalition that came to power in his name. All over the country, cutting across gender, regions, sectors, classes and the urban/rural divide, the aam aadami faces a crisis of economic opportunity and livelihood. She has suffered from a long period of high inflation, especially in food items. She has long suffered from growth that did not deliver more jobs, a decline in growth now threatens to cut down on existing livelihood opportunities. All the basic amenities that a citizen can expect from democratic governance – public provisions for heath, education and social security – are beyond the reach of the Aam Aadami. Rampant corruption from top to the bottom eats into whatever little could trickle down to them.

The Union Budget presented by the Finance Minister is a clever attempt to mislead the public in an election year. The Finance Minister’s speech offers little remedy for the key problems facing the Indian economy that he himself begins by acknowledging: slowdown of growth, rising fiscal deficit and current account deficit. The current crisis required the government to stimulate domestic investment by encouraging consumption from below; instead the FM remained focused on Foreign investors. Controlling inflation required expansion of PDS and reinforced subsidies on energy and focus on increasing agricultural output in pulses and oilseeds; instead the government has relied on hope. Meeting the demands and aspirations of the people required substantial and real increase in social sector expenditure, instead the government has resorted to statistical tricks and gimmicks rather than put its money where its mouth is. Nor is there any evidence of the government being serious about better usage and monitoring of the funds spent on these public provisions. Shockingly, the government has not come up with any measure to curb corruption and control the parallel black economy that the public is so visibly exercised about.

An analysis of the summary statistics of the budget make it clear that there is little connect between the rhetoric of the budget and its actual numbers.   In his speech the FM claimed that the government has not spared money for welfare schemes; the fact is that the UPA has drastically cut down on most of the key welfare schemes in the current year itself. The FM’s claims about increasing outlays in key sectors is a clear case of statistical fudging; the ‘increase’ claimed by the FM is with reference to the drastically reduced expenditure (Revised Estimates). In most cases the rise in budget allocations is barely enough to cover inflation. In real terms there is no increase in spending for the aam aadami. The FM has also used the age old devise of distracting public attention with the help of some gimmicks that cost very little.

The government needed to increase tax revenue, which has actually fallen by 4% in the current year over what was budgeted; similar false assumptions seem to driving the current projections of 20% increase in revenue. The much talked about move to tax the rich turned out to be a damp squib, for it would affect only 42,000 super rich and bring very small gains for the country. This small gain would be more than made up by the generous increase in the tax exemption, mostly for the well off and the corporate. The amount of ‘Tax foregone’ has gone up from Rs. 5,33,000 crores to Rs. 5,73,000 crores. There is no change in the capital gains regime to curb speculative gains activity in the stock market.The budget gives no indication of a political will to curb black income generation in the economy. The deferment of implementation of GARR to 2016 is another example of the lack of political will to curb tax avoidance. There is nothing in the budget to do away with non-transparent instruments like Participatory Notes or to reformulate the double taxation treaties with ‘tax heavens’ and black economy conduits.

 

Most of the schemes meant for the aam aadmi have remained static or have in fact gone down in real terms or even compared to the actual expenditure in the year before. The central Plan size has come down from Rs. 6,51,000 crore in the Budget last year to the Revised estimate of 5,56,000 crores, huge shortfall of Rs. 96,000 crores. In 2012-13 expenditure on agriculture and allied activities, rural development, irrigation and flood control and welfare of ST has actually gone down compared to the actual expenditure of the previous year. A similar comparison of the expenditure on health and education shows a marginal increase that barely keeps pace with inflation. The total expenditure on social services has fallen short by Rs. 23,000 crores compared to the budgeted allocations. This fact acquires significance for much of the social sector expenditure takes place at the level of the states where the transfer has been cut down by as much as 10,000 crores.

It is unfortunate that even the opposition has not drawn the country’s attention to these statistical lies and inattention to the needs of the aam aadmi. Aam Aadmi Party resolves to take this collective conspiracy of the political establishment to the people’s court and place the concerns of aam admi at the heart of our economic policy.