India’s Budget: Losing direction

By Jayati Ghosh

, by Frontline

The Budget provides proof of the United Progressive Alliance government having forgotten the importance of its own “flagship schemes”.

BUDGET 2012-13 provides conclusive proof that the United Progressive Alliance (UPA) government has lost its way. It has managed the remarkable feat of upsetting almost everyone and making no one happy. The Budget is highly regressive in both taxation and spending terms and will raise prices of essentials, so aam aurat and aam aadmi are not happy. Farmers, still the bulk of the workforce in India and the source of food for the country, are adversely affected by the rising prices of inputs and have little to celebrate in the fiscal policy. Surprisingly, even corporate India and foreign investors, who would seem to be the main beneficiaries, are up in arms against the Budget. They are protesting against the lack of movement in areas like foreign direct investment (FDI) in retail and other deregulation as well as against the retrospective opening up of tax cases through amendments in the Income Tax Act.

The Budget provides deeper evidence of the UPA government losing its way because it seems to have forgotten the importance of its own “flagship schemes”. These schemes (which were ultimately brought in and implemented also because of outside pressure from the Left parties) were the basic building blocks of any success achieved by UPA-1. The Common Minimum Programme worked out with the internal and external allies created a cohesive framework within which the government operated despite the many pulls and pushes and despite the contradictions of implementing progressive and pro-poor policies within a broadly neoliberal economic policy framework. In fact, these schemes contributed in no small measure to the electoral victory of the Congress in 2009 and the subsequent emergence of UPA-2.

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