Budget as the common man sees it
AS a matter of routine, we have our budget for the upcoming financial year. And, as usual, the post-budget reflections on this annual exercise are also on. The array of abstract figures that embellish a budget may reveal a lot of information to the enlightened ones and the experts; but those hardly carry much meaning to the majority of the population who are not experts. On the other hand, they usually look at the event of budget announcement with a bit of apprehension, if only because after each budget the prices of essentials invariably climb a notch or two higher up the price ladder. And the traders in these items, too, never miss the slightest opportunity to make the most of the fiscal measures to push the prices up.
Small wonder that before every budget consumers have the tendency to buy some commodities in larger quantities at the pre-budget prices, just in case prices should go up after the budget. Usually, it is again the traders who try to instil such fear in the minds of the customers. That helps the traders to make a brisk business out of the public's anxiety over possible post-budget price hike. If any fresh duties are imposed on some consumer goods, then the traders get a second chance to make profit. In other words, the traders gain both ways to the chagrin of the consumer folk. This time, however, the finance minister, at a post-budget press briefing, assured the public that prices of essentials have not after all risen after the budget announcement.
But that assurance could hardly assuage the common man because the prices of many kitchen market commodities are already beyond their reach. So, even 0% customs duty on rice, wheat, onion, pulse, edible oil, fertiliser, etc in the next budget is not going to help them much. And since they do not remember if ever there was any instance of prices going down after the budget, they have nothing to exult in it, either. The burden of Value Added Tax (VAT) and the expansion of its spread (for example, on imported sugar, handmade biscuits, cakes, etc will affect small businesses, which in turn will have a knock-on effect in the market), as proposed in the budget for fiscal 2010-11, will ultimately fall on the shoulders of the common consumers. Sugar, in particular, is a very important essential commodity and increased duty on it is certainly going to affect the life of the common people. The finance minister's post-budget assurance that increased duty on imported sugar will not impinge on the market is cold comfort for the general public.
On the other hand, VAT exemption on certain businesses such as travel agency, manpower export and so on will hardly leave any impact on the businesses targeted, if one considers the fact that their operators will pass on the cost burden on the end users of these services. As for instance, increase in Compressed Natural Gas (CNG) price on the grounds that it is one-third of that of petroleum is not really convincing. The resulting impact will be a further hike in the cost of transport, which is already beyond the range of the daily commuters. And higher transport cost will go to raise the prices of goods and services as they are hauled from one place to another. That means this way or that way it is the hapless consumers who will have to pay through the nose, and not the intended section of traders who are supposed to bear the cost.
What is the expectation of the people in the middle and lower-income brackets from the new national budget? There is really no good news for them. Continuation of the safety net program for the ultra-poor and widening of its spread is undeniably a good move by the government, though whatever increment has been made in terms of allocation in absolute terms has been watered down by its expansion. That is, the share of the allocation in the safety net program for FY 2010-11 in proportion to the total budget has really gone down compared to that in the previous FY. But again such programs to dole out some money to the very poor, albeit it is helpful for sustaining the needy for a short while, hardly goes to address the scourge of continuing pauperisation in society. If truth be told, the condition of the elderly as well as the able members of the very poor households will improve only when the economy is able to provide them with jobs round the year.
That brings to the fore the issue of economic development spelt out in terms of the rate of Growth of Gross Domestic Product (GDP). The new budget aims to attain a 6.7% GDP growth by next fiscal, and for that it has focused more on infrastructure development, especially power generation, to facilitate investment and expansion of business. Which is why the allocation for power and energy sectors in the new budget has been enhanced by 60% over what it was in the outgoing fiscal year. But stress on rental power generation means very high cost of power, and there is no clear indication in the budget as to how the electricity thus generated would come within the reach of the common consumers.
Given the fact that gas is getting scarcer, the government meanwhile would do well to announce a comprehensive policy on off-shore gas and oil exploration, and especially on extraction of coal and establishment of coal-fired power plants to produce cheaper electricity for the general consumers and the industries. Another bad news is that the tariff on power will go up in the next fiscal year. But, except presentation of the wish list of steps to ensure economic growth, no instant measures are visible to enhance the people's level of income so that they may foot the bill of fare inflated by the hike in cost of living.