JANUARY 25, 2010

Budget 2010: Many sectors crying for FM's attention!

By M G Venugopalan, Former CBEC Member

TIOL wanted a few suggestions for the next Union budget. As citizens of this country, we are all free to list our demands for inclusion in the budget. But whether the FM would accept our suggestions or not - well, we may have to wait till the budget is presented! Though budget making in India is still a ‘highly secretive privilege' of the FM, it is certainly not a ‘solo one man show' of the FM. The FM is fully assisted by the entire machinery of the Ministry of Finance. It is customary for the FM to ask for and get a cross-section of views from all stake holders in the country, systematically well before the budget proposals are finalized. What all ingredients goes into the budget menu, is known only to the Secretaries of MoF and the concerned personnel of the TRU/TPL wings, two specialized agencies under CBEC and CBDT. What all we read / hear in the audio visual media about the budget before its presentation is all guess work - some intelligent and many wide off the mark! The FM keeps only the PM informed of his perceptions and priorities in the budget making. Even the Union Cabinet is briefed about the salient features of the budget, only hours before its presentation in the Lok Sbha.

The Union budget for 2010-11 is going to be presented on the February 26th, two days ahead of the conventional date. The annual budget date is being advanced from February 28th, because February 27th is a government holiday (Prophet Mohammad's birthday while February 28 is a Sunday). The FM's assessment is that the economy is generally looking up and the over all signs are good. This would be the second budget of the UPA-II, with the first one presented in July last year after the general elections. The budget exercise has already been initiated by the Finance Ministry amidst a debate on whether stimulus measures should continue and if so, for how long, in the wake of the economy showing signs of recovery. Both the PM and the FM have expressed their confidence that India's GDP would clock 9-10% growth in the near future and it may exceed 7 % this year, itself.

What are the prime areas of concern for the FM in the present situation? Well, some of his recent statements indicate his priorities- ‘ensuring inclusive and environmentally sustainable growth, control of cost push inflation, accelerated employment generation , increased allocation for the development of physical and social infrastructure , funding the increasing demands from MoD/MoH due to turbulent internal and external security environment, energy security and the need for larger resource mobilization for meeting all these rising demands and expectations. Apart from the two major tax reform measures on the anvil-ie.introduction of a new Direct Taxes Code and GST in the next budget, some of the other areas of crucial concern, as we could make out from the media, are the following:-

"Where will the 'next Bill Gates come from” ?

“Forty per cent of Americans predicted that the next Bill Gates will come from either India or China," – understood from a national survey released by the Consumer Electronics Association (CEA) on the sidelines of the world's largest consumer technology tradeshow at Las Vegas.   The economic survey, conducted by Zogby International, found that 68 per cent of Americans think that innovation was key to the future success of their place of employment, with 50 per cent maintaining that innovation was important for their job remaining in the US.   After the World Economic Forum reported that the US has lost its global competitiveness ranking while India, China and Brazil have gained, 74 per cent of Americans said it was the US that would regain its status next year.

The Indian corporate sector, particularly the IT sector needs a strong push from behind for regaining their diminished dynamism. What precise steps the FM would initiate in the current year's budget to materialize the dream of creating the next Bill Gates from India is hard to predict. But Prnabda, a veteran of Finance, who regained the portfolio after 25 years, is no die hard socialist. He is an avowed friend of the Indian corporate sector and he has a soft corner for some of the very successful promoters of Indian corporate world. Wait for the budget to find out who all (or what sectors) are going to be gained by his largesse!

Whither women's liberation?

Mythili Rangarajan's article in Hindu dtd Jan-10th traces the continuing tale of atrocities on women perpetrated by socially and politically powerful men to quench their insatiable lust. Education has failed to broaden our outlook. Having been denied the basic rights to education and means to honorable living, millions of poor helpless female children in India, are forced into flesh trade by the ever greedy traffickers. Once inside the vice racket, their escape routes are closed for ever, at a tender age. Can these helpless human beings see light at the end of the dark tunnel ? Will the Ministers in charge of women and children's welfare ever come up with a credible, accountable and time bound initiative to end the generations old barbaric slavery at least at the end of sixth decade of our independence ? The concerned Ministries plea for larger allocation of funds for sustaining meaningful programmes.

Token increase in the budgetary allocations of these Ministries will not do. Something more tangible and result oriented initiatives are expected from the FM to improve the dire situation of poor girls in India. Let us hope that the invisible hands of Soniaji will make the appropriate moves for safeguarding the lives of millions of girl children in our country. Wait for the budget to see what new initiatives would be made by the FM and the concerned Ministers in this regard.

Educational Reforms

“What was once considered a stigma, ie. attending private coaching classes or tuition classes, is turning into a multi hundred crore business activity spread across the country. Besides mushrooming of coaching institutions, it covers boarding, lodging, publishing and advertising business. Many Coaching centres for entrance tests to medical/engineering colleges even arrange admission to their students in the local formal schools. At the end of the academic year, the schools provide them +2 Certificates and the coaching centre imparts learning to score high marks. This clearly reflects the dissatisfaction of parents with the formal educational outcome of schools. Marks in the entrance examination have become the sole criterion to judge a student's abilities. For the rising middle class, success at the entrance exams is a gateway to material prosperity and higher social status. This breeds a callous attitude towards formal education. Coaching centres are huge financial spinners to its promoters and burden to parents. Students from poor families in rural areas/small towns cannot afford the expensive coaching .Hence they are clearly at a disadvantageous position. Children have no time for out-door games or other extra-curricular activities and a spoon fed generation through ‘fragile leaning' is being raised in our country. Well trained teachers teach at these coaching centres at the cost of their duties in the schools. Thus the parallel schooling system subverts the formal schooling system.

Education should be aimed at nurturing the all round intelligence and skills of a child. This has to be supported by creative learning ,flexible and scientifically designed student assessment system. Performance should be reflected in a portfolio revealing the total personality of the child and his /her aptitude in any particular field. Private Coaching business needs to be regulated and the ongoing examination reforms given greater impetus.

Some concrete initiatives have been taken in this regard by Mr.Kapil Sibal ,the new Education Minister. But the pace of reforms is very slow. Education is in the concurrent list of the constitution. Despite this constraint, the Central Govt can do a lot to improve the educational standards, curriculum and merit based assessment. A series of incentives and disincentives to the States can usher in quicker reforms in the education sector.

Control of Auto- emission

Green is the theme at the recent, 10th Delhi Auto Expo. With the rising concern over increasing auto emissions and global warming , Auto manufacturers abroad and in India are fast shifting their focus towards greener electric, hybrid vehicles besides offering customers the option of more fuel efficient vehicles run on low emission fuels such as CNG/LPG etc. Signs of things to come in the near future are clearly visible in the Auto Expo. But the latest version of Prius- the most successful hybrid car introduced by Toyoto, would cost over Rs. 20 lakhs on road in India. How many in India can afford this vehicle? Over 50% of this cost represent various taxes to be paid by the customer.Other mfrs like Honda, GM, BMW, Hundai, Maruthi, TATA have also unveiled their plans to introduce more fuel efficient hybrid/electric models, to tap the huge potential for greener vehicles.

The control of Auto emission is an urgent need towards our overall commitments made at Kyoto and Copenhagen. Liberal Tax incentives for hybrid/electric/fuel efficient automobiles(both in CENVAT and VAT) would make the pace of introduction of green/fuel efficient automobiles and control of Auto-emission in India.

Do something for the NRIs

The recently concluded “Pravasi Bharatiya Diwas” has estimated the strength of overseas Indians at 250 lakhs and their ever increasing foreign exchange remittances(over US $50 Billion) knowledge, expertise skills and other resources have become an important input in India's march towards becoming a developed economy. While the Indian President saluted the Indian workers in the Gulf who alone contributed over US $ 20 Billion annually, NRIs have no voting rights in India. It is also fact that most of them in the Gulf suffer from poor working conditions, patchy social security cover and perpetual social /personal insecurity. One in four NRI women in Gulf face some kind of abuse- mental, physical or societal. They are also victims of loneliness, desertion of wife, fraudulent marriages, many who venture out get stranded abroad without any income/job due to loopholes in the emigration laws, harassment/exploitation from visa brokers/emigration authorities, and weeks of delay in repatriating the bodies of Indians who die abroad.

GOI can no longer wink their eyes to the real problems faced our NRI brothers and sisters in India and abroad. Creation of a separate Ministry to take care of their welfare has focused the attention of the Govt. to their problems. But that constituency of the polity has lots of grievances which cannot be ignored any more. Their real problems will have to be sorted out at the earliest. Their exposure to the rest of the world and the governance practices else where have widened their horizon. If the PM genuinely expects them to return to India and participate in the ongoing nation building activities, recognize their worth and assimilate them as a vital part of the Indian polity. Let their voice be heard inside our Parliament and State Assemblies and their interests will have to be protected.

Development of our Renewable energy sector

MoF is reported to be throwing up its hands for supporting an over ambitious programme in the renewable energy sector in the last years budget. The target for the recently launched Jawaharlal Solar Mission has to be lowered from the original target of 20000 MW to 4000MW this year. Achievement of the original target required funding to the tune of Rs 2,70,000/- crores. MoF has realized that it could not fund such a project this year for want of resources .At the most they can provide about Rs. 9000 crores enough for 4000 MW. Today's news paper reports that the target of 20,000 MW would be achieved only by 2020 !

At the same time our next door neighbor China, is marching ahead as the world's leader in the generation of Nuclear, Wind and solar energy. China is building its own solar power plants using hundreds of mirrors to concentrate sun's heat to produce steam which can run generator to produce electricity.

MoF needs to be realistic in estimating the resource needs of other Ministries. Laying down over ambitious targets and under achievement reflects very poorly on the UPA Govt. The efforts so far made by us in the development of solar and wind energy is clearly less than adequate. We need to tap the latest technology available in the world like China and forge ahead instead of relying on conventional coal and hydro sector projects to augment our energy requirements.