Gujarat chief minister Narendra Modi cast a long shadow on P. Chidambaram's budgetary speech on Thursday. He was not named by the finance minister, but he was the reference point. UPA II, winding down to the last year of its rule, tried to portray itself as standing proudly apart from Modi and his model of development - its eye on a vote bank comprising the youth, women and the poor that it has tried to fashion and pamper through the budget document.
And no, the middle class, disenchanted with the Manmohan Singh government's record on corruption and economic growth and at the vanguard of several protests against the government, was not a priority.
Just minutes into his speech, while making his point on the "moral case for equity" Chidambaram appeared to snub the Gujarat leader. "We have examples of states growing at a fast rate, but leaving behind women, the Scheduled Castes, the Scheduled Tribes, the minorities and some backward classes. The UPA does not accept that model," the finance minister said, adding: "The UPA government believes in inclusive development, with emphasis on improving human development indicators."
FULL BUDGET SPEECH
These are the points on which the Congress has repeatedly attacked Modi, more recently following his address to students of Delhi's Shri Ram College of Commerce. This was not about taunting Modi with the maut ka saudagar epithet. The engagement has gone well beyond that.
If the effort of the Budget speech had been to bring in some immediate good news, this did not happen. At the stock market, it was the worst Budget-day show since 2009 as the BSE benchmark Sensex plummeted 291 points to end below 19,000-level as the Budget did not offer any major concessions for large investors to push up the growth rate. For the middle class which has been left in the lurch, matters were made even worse as the GDP figures released on Thursday showed growth slowing to 4.5 per cent during the October-December quarter this year dashing all hopes of an immediate turnaround in the economy BJP chief spokesman Ravi Shankar Prasad, who made no effort to play down the Gujarat angle, said about the Budget proposals: "It is the desperate comment of a defeated finance minister who has no elbowroom to give good money to reduce poverty levels because of the gross mismanagement of the Indian economy. In Gujarat, development has reached all sections of the society. Hence, the Congress lost so badly in the assembly elections held in December last."
Chidambaram's proposals included some interesting ones and some downright curious. Customs duty evasion, for instance, has been made a non-bailable offence. Then, in a classic case of good money chasing bad money, funds mopped up through disinvestment are proposed to be diverted to PSU banks and the railways.
FULL COVERAGE:Union Budget
In a financial sleight of hand, Chidambaram shaved off close to Rs 92,000 crore from the budgeted plan expenditure of Rs 521,025 crore for 2012-13 to curtail the fiscal deficit and ramp up allocations for 2013-14. While the middle class got a raw deal from the finance minister, the focus on women, the youth and the poorer sections was deliberate.
Women and youth have formed the backbone of the Gujarat chief minister's success story.
The Congress, it is clear, has launched its poll bugle by trying to woo these sections back. At the chintan shivir held in Jaipur in January this year, Sonia Gandhi and her son Rahul had made pointed references to these sections in an attempt to persuade them to come back to the Congress fold. "I wish to draw a picture of three faces that represent the vast majority of the people of India. The first is the face of a woman. She is the girl child, the young student, the sportswoman, the homemaker, the working woman, and the mother. The second is the face of the youth. He is impatient, she is ambitious, and both represent the aspirations of a new generation. The third is the face of the poor who look to the government for a little help, a scholarship or an allowance or a subsidy or a pension. To each of them, on behalf of the government, the PM and the chairperson of the UPA, I make a promise," Chidambaram said amid thumping of desks.
He proceeded to announce for women a Nirbhaya Fund, for the youth a skill development programme and for the poor a countrywide roll out of the direct benefit transfer scheme.
The funding strategy for some of these plans includes tapping those at the other end of the economic ladder. Chidambaram slapped higher taxes on the super-rich and big corporates to bankroll flagship schemes for the poor and send a strong political message in his last budget before the Lok Sabha polls. The 'super-rich' tax was levied as a 10 per cent surcharge on those with incomes exceeding Rs 1 crore and the finance minister said there were 42,800 tax payers in this bracket.
In a lighter vein he remarked, "I believe there is a little bit of (Wipro chief) Azim Premji in every affluent tax payer. I am confident that when I ask the relatively prosperous to bear a small burden for one just one year they will do so cheerfully." The reference was to Premji's large donations to charity and education.
Similarly, on Indian corporates with taxable income of Rs 10 crore, the surcharge has been raised from 5 per cent to 10 per cent. Foreign companies will pay an increased surcharge of 5 per cent, up from 2 per cent.
The increase in these direct taxes is expected to rake in around Rs 13,300 crore. "Fiscal consolidation cannot be effected only by cutting expenditure. Wherever possible the revenues must be augmented," Chidambaram said.
Without changing the basic slabs and rates in income tax rates, the finance minister gave a minor exemption of Rs 2,000 in the tax burden to individual tax payers with taxable income of up to Rs 5 lakh. The 3 per cent education cess will continue for all tax payers.
Tax expert Subhash Lakhotia said that the Budget is a big disappointment. "There is no provision in the Budget to encourage savings and investment. Besides, the elderly have been ignored," he said. Meanwhile, excise and customs duties on luxury goods on SUVs, yachts and cars were hiked as part of the politico-economic strategy to mop up more from the rich.
The Congress, in its efforts to camouflage the potholes in the economy, has clearly joined the race to captivate the minds of an aspirational India in its last ditch attempt to corner the vote.