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Home > India > Business > Columnists > Guest Column > Shishir Bhate

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Has UPA let an opportunity pass it by?

February 16, 2009

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A preponderance of economists and industrialists in the country believe that the general budget is slowly losing its significance. What could then be said about an interim budget, other than the fact that it is an exercise reduced to reading out a statement of accounts and waxing eloquent on the government's achievements? And that it challenges you not to nod off while it is being presented.

Governments these days fiddle throughout year with policies on tax, duties, concessions, and even go to the extent of influencing the Reserve Bank of India [Get Quote] so that its monetary policy falls in line with the ruling political dispensation's ambitions. These 'corrective measures' all the year round often tend to make Budgets irrelevant.

The United Progressive Alliance government has in the last couple of months announced two economic packages -- wherein excise duties have been cut and a ton of money has been infused into the market -- with the view to keeping aloft the nation's economy which has been buffeted by ill global winds.

Acting finance minister Pranab Mukherjee had himself recently indicated that there was yet another economic stimulus package in our near future. The government has also urged banks to cut interest rates so that people have more money in their hands to spend.

In view of this, most people had expected the acting finance minister to go the whole hog in the election year interim budget, what with the Constitution not barring an outgoing government from announcing tax sops.

Also, given the debilitating effects of the economic slowdown on various industry sectors and indeed on the nation's GDP growth, the government would have been well within its right to push through a populist budget under the garb of not letting the country's economy drift till such time as a new government is put in place after the general elections.

Which is why it was surprising to see Mukherjee stick to propriety and not announce any concessions aimed at wooing the vote banks.

So has the UPA government let such an opportunity pass it by? Well, maybe it hasn't. The finance minister can still come up with an economic stimulus package for the nation, it can still ask the RBI to further reduce rates, it can push the public sector banks to cut interest rates on loans, it can still announce easy credit lines to sectors like real estate, textiles, manufacturing, etc...

However, if the tenor of the interim budget is anything to go by, the UPA might refrain from announcing any further stimulus package before the elections. The fact that UPA has not fallen prey to this trick, at least in the interim budget announcement, can only be healthy for the Indian democracy.




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