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Some opaque parts of the Budget
March, 07th 2008

The Budget suffers from want of transparency and clarity. Even those who are wholly for the farmers loan waiver are puzzled about how the Finance Minister plans to make good the liquidity of the banks.


This year, the Finance Minister, Mr P. Chidambarams customary flair was missing. Having come to the last year of the term of the Government, and presenting his fifth consecutive Budget, has a kind of ennui set in?

His speech was disjointed and lacking in any sense of proper sequence or proportion. Allotments of Rs 5 crore and Rs 10 crore to some minor scheme or institution jostled with those of tens of thousands of crores of rupees for mega-schemes.

The speech was just an enumeration of a series of schemes and their allocations without any strategic vision.

Also, the monotonous narration of one scheme after another with the provisions made for them drove everyone to a state of somnolence and the Lok Sabha TV channel was enterprising enough to catch glimpses of some yawning MPs! The Finance Ministers habit of making every announcement seem, by his tone and voice, as if it is of world-shaking importance did not help either.

Crisper and shorter

Mr Chidambarams Budget would have made a far greater impact had it been crisper and shorter, taking, say, not more than 45 minutes, or so.

Actually, there was no need for the Minister to ponderously list out the setting up of 12 Central Universities and three IITs, upgrading Industrial Training Institutes, assisting some sainik schools or announcing grants to various institutions.

There is nothing secret or sacrosanct about these commonplace decisions, and they could have well been made public through a media note or media conference before, or simultaneously with, the day of the Budget. In important respects, the Budget suffers from want of transparency and clarity.

Even those who are wholly for the farmers loan waiver are puzzled about how the figure was arrived at and how the Finance Minister plans to make good the liquidity of the banks.

Benami holdings

On the face of it, it is difficult to believe that such a massive amount of Rs 60,000 crore has been taken as loans from the scheduled commercial banks and the organised banking sector.

Also, the target date of June 30 for wiping the slate clean is too tight, even assuming that banks will set aside all other operations just to attend to the waiver.

There is every chance of their getting enmeshed in complications relating to establishment of contacts with individual loanees, verification of claims and squaring up of the accounts so that, in case the farmer turns up for a fresh loan after June 30, he is not sent back disappointed.

There are quite a few rich farmers who have parcelled their land into benami holdings of small and medium farmers, and they would undeservingly benefit if their claims are accepted at face value.

The Finance Minister has also glossed over the problem of loans taken from money-lenders, who are also often middle-men, buying the farmers produce at unremunerative prices.

The large increase of 20 per cent in the allocation for education is to be welcomed, but Mr Chidambaram has not taken the people into confidence as to the amount of education cess collected so far, and the schemes on which it was put to use.

Some of the other opaque areas of the Budget are in respect of meeting liabilities arising from the recommendations of the Sixth Pay Commission and the provision and modalities envisaged for reducing transmission and distribution losses from the present 40 per cent or thereabouts to the accepted norm of 10-15 per cent.

Nobody grudges the raising of the allocation to Defence, but whether the nation is getting the maximum bang for every buck is a question not answered so far.

It is high time a critical scrutiny of this aspect was undertaken.

B. S. RAGHAVAN

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