Disappointing Trapped between a stuttering economy and a spiraling deficit, India decided to toe a middle path, with Finance Minister Pranab Mukherjee presenting a budget that disappointed an over-eager stock market and provided little clarity on the future of reforms that have driven the country's economic growth in the past. The budget, though, seems largely meant for one constituency: the rural poor who returned the Congress-led coalition to power. Indian farmers, who are the country's primary voters, could use the help. They are sweltering through an abnormally hot summer: India's crucial monsoon rains are currently about 50% below requirements, raising the specter of increased malnourishment at a time when the urban economy has largely stalled as a result of the worldwide recession. All of the government's ambitious proposals to help the rural poor come with a heavy cost. Because tax collections have fallen during the slowdown, the government will now borrow an additional $93 billion this year, pushing the federal deficit to 6.8% of the country's $1.2 trillion GDP. – Mehul Srivastava, BusinessweekOne positive thing There are positive steps for the economically weaker section in this budget. To be honest Pranab Mukherjee's done a lot – like the NREGA that helped them win the elections. He's given that a big boost. There are many many small things for the economically weaker section. If there is one positive thing in the budget it is that. – Prannoy Roy The finance minister has scrapped FBT – and this was seen as one of the biggest steps he has taken so far –, but, here is the sting in the tail, he has reintroduced the taxation of perks in the hand of employees. Actually, even that is fine, when it comes to perks like cars, and foreign vacations and items like that – because employees should pay tax on them. The real problem is going to come with the taxing of ESOPS and superannuation. This FBT issue is going to annoy many people. – Vikram Chandra Populism vs Growth: I think this budget is a mixture of both. I don't think it's clearly a populist budget; nor is it a growth budget. It's a balanced budget in a very difficult time. It's a very difficult time for the world's economy and so is it for us. So he's trying to balance it. – Dorab R SopariwalaBalancing act The markets might have been disappointed but finance minister Pranab Mukherjee won the admiration of his partymen for adroitly covering all political bases in his budget. His proposals betray a keen sensitivity to the ruling party's interests but without appearing populist or wary of reforms — a balancing act that should validate the instincts of those who preferred the veteran leader for the finance ministry portfolio over the reformist Montek Singh Ahluwalia. One possible criticism of the budget could be that it lacks the big focus, the central idea by which it could be defined. But that cavil gets offset by the care taken to offer something to every section — hiking the I-T exemption limit and abolishing I-T surcharge for the middle class, raising allocations for minorities, higher pension for jawans, subsidised housing for slum-dwellers and many other measures. The attempt not to annoy any constituency is best illustrated by how references to disinvestment have been framed — in a way designed to avert confrontation not just with the Left but also allies like DMK, but without ruling out any option either. – Times of IndiaReturn of socialist past The budget outlines three priorities: 9% economic growth, “inclusive development” and better public services. It would achieve these outcomes by boosting spending by 36% to 10.2 trillion rupees ($211 billion), mostly on handouts and infrastructure. No major public-sector rationalization or private-sector liberalization were announced. This is in effect a revival of India's socialist past and a rejection of the 1990s reforms that gave India the best kind of “inclusiveness”: economic growth. Finance Minister Pranab Mukherjee was explicit about this political sea change: “Aam aadmi,” or the “common man,” is “now the focus of all our programs and schemes,” he said yesterday. He extended a raft of loan and job guarantees to the poor – programs that are already eating up around 1.3% of GDP and will only grow. The budget is in line with party leader Sonia Gandhi's emphasis on populism, but it's especially disappointing given the track record of Prime Minister Manmohan Singh, who once upon a time was an economic reformer. The great irony is that by extending government's influence in the agricultural sector, which employs 60% of the workforce, Delhi is only retarding its growth. India's challenge is to move its poor from the farm to the factory.
