He's won a big farm club with his human face

Mr. Kumar Mangalam Birla

It’s no doubt been a tightrope walk for the FM. He’s had to balance multiple objectives such as higher social spending and higher growth, even while keeping the fiscal deficit in check as mandated by the Fiscal Responsibility Act. And, he has the handicap of having to implement the Budget in seven months.

Considering all these constraints, the minister has presented a favourable Budget. One that is scrupulously consistent with the broad objectives of the National Common Minimum Programme.

What’s most important is that the first Budget of the UPA confirms that the reforms process remains largely on track. The moves towards fiscal consolidation along with the limited nod to disinvestment are both in line with their stated reform policies.

It is clear that the “human face” predominates. There’s indeed greater emphasis accorded to basic needs such as education, health and drinking water. The economic reforms of the 1990s had largely bypassed the agricultural sector — especially issues such as creating a common countrywide economic market, and incentives for the flow of greater credit and investments into the farm sector.

This Budget has tried to address that lacuna. In fact, it provides the highest priority to the agriculture sector.

There’s a pronounced strategic intent to broadbase India’s agriculture output — that’s being done by moving away from foodgrains and towards more value-added output.

Innovations such as food stamps and introduction of weather insurance schemes, both on a pilot basis, are commendable. The boost to the rural and agricultural economy, will grant a substantial push to industry. There is yet another clear area of focus — infrastructure which is to be developed through public-private partnership.

The Budget very clearly reaches out to the underprivileged and lower income groups with provisions for drinking water, housing, employment, health insurance, mid-day meals and education. These objectives are in line with UN’s Millennium Goals to halve poverty over the next decade.

The boost to the farm sector will certainly have a spin-off effect on the entire economy. However, the growth triggers for the industrial sector could have been more direct. The setting up of an investment commission, a competitiveness council, incentives to de-bottleneck capacity by 10%, and a hike in the sectoral caps for FDI in some sectors are forward-looking steps. The status quo on corporate taxes is, perhaps, a lost opportunity.

Excise relief has been granted for farm implements and fiscal incentives for agro-processing and diversification as we move away from traditional foodgrains to processed food and horticulture.