Business Today Editor Chaitanya Kalbag
Cigarettes, cigars, cheroots, big motorcycles, SUVs, luxury yachts, and the "only 42,800 persons who admitted to a taxable income exceeding Rs 1 crore per year" have all been hit by P. Chidambaram's sledgehammer. But the Finance Minister has been kind to women, children, the poor and the elderly. Throughout his 105-minute speech, the finance minister kept his gaze fixed on next year's general election, and served up a meal that tried to suit all tastes and had enough nutrition to satisfy the skeptics.
"The economy is indeed challenged," Chidambaram said, and it was significant that in his post-budget press conference he clearly indicated that the Budget was not the last word. He said "another set of measures will be announced" when he replies to the debate on the budget in Parliament, and yet more measures will be announced when the Finance Bill is passed. So it was a time for "prudence, restraint and patience", he said, adding that "patience" was the most important word.
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"I think 2013/14 will be a better year than 2012/13 in terms of growth, in terms of inflation control and in terms of investment," Chidambaram said. He said he was confident GDP would grow by at least six per cent in 2013/14 and in 2014/15 the country should aim for growth of above seven per cent.
More access to education, healthcare, food and a greater sense of security - Chidambaram very crisply laid out his broad agenda.
"Hope inspires courage," Chidambaram said, and this was very clearly UPA II's final budget, and the last chance this nation had of avoiding a sovereign debt-rating downgrade. It looks like Chidambaram has pulled off quite a smoke-and-mirrors exercise. He has actually increased spending on social sectors, targeting women, children, and lower-income homes, turned the screws on the rich, targeted conspicuous consumption and made more than a perfunctory gesture towards the North-east, with an interesting plan to build more roads, even to Myanmar. But there were no earth-shattering axe blows. In fact the government has been doing quite a bit of "stealth budgeting" with rises in diesel prices, a reduction in LPG subsidies, and other fiscal consolidation steps well ahead of February 28. The most telling portion of his speech, and the one that makes clear Chidambaram knows which side of his vote bread is buttered, came when he said: "We have retrieved some economic space…Hon'ble Members will find that I have used that economic space to advantage - and to advance the UPA Government's socio-economic objectives."
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So low-cost housing received a boost, service-tax evaders (the carpenters, plumbers, and contractors who have evaded paying since 2007) got an amnesty, men and women who import gold jewellery got a higher duty-free allowance - although the Economic Survey on Wednesday clearly said gold buying was actually fuelling India's current-account deficit - and there was even a Rs 1,000-crore "Nirbhaya Fund" inspired by the Delhi gang-rape victim (probably the first time a crime has figured in a budget speech). There will be more FM radio channels across the nation, and an interesting pledge that every town with more than10,000 inhabitants will get an LIC branch and an office of at least one public-sector general insurance company.
To be fair, Chidambaram also recognized India's huge skills gap, and his offer of a cash reward of Rs 10,000 to every youth who is certified as having learnt a new skill is a good step. But that is a mere speck on the huge target of skilling 500 million Indians by 2022. And in making lofty promises to women, young people and the poor, he again unabashedly said: "To each of them, on behalf of the Government, the Prime Minister and the Chairperson of the UPA, I make a promise" as the Lok Sabha camera zoomed in on Sonia Gandhi.