Instead of curbing wasteful expenditure by ministers and bureaucrats, the United Progressive Alliance government is reducing subsidies of the poor in the name of bringing down the fiscal deficit.
This is the view of Yashwant Sinha, former finance minister.
Sinha was addressing the media soon after Finance Minister Pranab Mukherjee presented the Budget in the Parliament on Friday.
"The Indian economy is passing through challenging times," Sinha said.
"The sentiment with regard to the economy is low.
"The presentation of the Union Budget 2012-13 was a historic opportunity for the Finance Minister to take corrective steps.
"Leadership, clarity and cohesiveness in the United Progressive Alliance are what one needs.
"But all these are lacking. The Finance Minister wasted a historic opportunity, by presenting a non-Budget," Sinha said.
"His Budget is an accounting statement but not a policy-enhancing document. It fails to lift the sentiment of the economy," he added.
"The fiscal deficit for the 2011-12, which has been shown to be 5.9 per cent, is an under-estimation," Sinha said.
"The final figures may even be more disturbing," he added.
"The finance minister had a chance to take steps to enhance economic activity, increase the size and volume of the Indian economy, raise higher revenues from higher economic activities and correct the fiscal deficit.
"He has chosen a retrograde method," Sinha said.
"He has presented a Budget with a high dose of taxation.
"Never in recent history have taxes been increased on the tax payer to the level as this Budget has increased them, he said.
"The rebate in the direct taxes is minimal," Sinha said.
"Eventually, after the Direct Tax Code, when the changed structure of taxation comes into force, even this small rebate may disappear, he added.
The Finance Minister has imposed a higher dose of Indirect Taxes at Rs. 45,940 crore (Rs 459.4 billion).
The devil, however, lies in the details, Sinha said.
Higher rates of taxes, coupled with additional collections, have given rise to a budgetary premise that the increase in taxes would be as under:
1. Corporate Tax: Rs. 45,547 crore (Rs 455.47 billion)
2. Income Tax: Rs. 23,907 crore (Rs 239.07 billion)
3. Custom Duty Rs. 33,694 crore (Rs 336.94 billion)
4. Central Excise Rs. 43,655 crore (Rs 436.55 billion)
5. Service Tax Rs. 29,000 crore (Rs 290 billion)
The next year's fiscal deficit, despite such anticipated collections, would still be at a monstrous 5.1 per cent, Sinha pointed out.
"Even this is based on the premises that subsidies are reducing by Rs 26,000 crores (Rs 260 billion)," he said.
Infrastructure is an area where India needs to grow.
The Budget should have given an impetus to it through public private partnership, he pointed out.
But all it did is to continue the existing infrastructure initiatives, the funding of which will depend entirely on external commercial borrowings or tax-free bonds.
According to the former finance minister, areas like defence services and capital expenditure have been grossly neglected.
The expenditure on National Rural Employment Guarantee Act has been brought down in the budgetary estimate by Rs 7,000 crores (Rs 70 billion).
Reports have indicated that from April to December 2011, the average employment under NREGA was only for 32 days.
This is a dismal performance by the government's flagship scheme.
"There is no mention of even minimal reforms in the Budget.
"The government has just performed an exercise wherein it has increased taxes to provide for additional expenditure and window-dress the fiscal deficit," he emphasised.
According to Sinha, the target of fiscal consolidation, which the Finance Minister has repeatedly spoken about, appears to have been abandoned.
Higher taxations coupled with inflation and high return interest rates are going to make Indian economy sluggish and slow.
The non-competitive economy cannot turn around.
Bereft of any ideas, the Finance Minister has brought back the conventional model of higher taxes and higher expenditure.
Image: Yashwant Sinha
Union Budget 2012-13: Complete coverage