This is an election budget that strays far beyond the remit of an interim budget, whose only concession to the propriety of refraining from major changes for the next year that is the rightful remit of the new Lok Sabha and the new government that will take charge in the second month of the new fiscal, is to break the promise made in the first budget of the present government, to reduce the corporate tax
rate to 25%. This makes the budget unethical.
An expenditure might be valid in itself, say, meeting the requirement of an indigent person in need of surgery that costs, say, Rs 2 lakh, but if the hospital chief were to order that the expenditure would be met from the salary of the surgeon carrying out the surgery, how would we react? To say this is an improper order is not to question the surgery per se, but to question the morality and ethics of who takes the decision and who bears the cost. Thus, with the present budget’s tax give aways and huge spending plans.
The Budget probably fudges the fiscal deficit figures by at least 0.3% of GDP on account the borrowings of state owned entities that are serviced from the consolidated fund of India. That straightaway raises actual fiscal deficit to 3.7% of GDP for the current fiscal.
The Ayushman Bharat Scheme, claimed the interim finance minister presenting his interim-plus budget, saved 10 lakh patients an expenditure of Rs 3,000 crore. That works out to a per capita expenditure of Rs 30,000. If the premium is set at a level pegged to this kind of payout, either the scheme would be sorely underfunded or the fiscal deficit would shoot up.
This fudge, too, is unethical. Considering the additional borrowings states have had to take on and service under the salvage operation for state electricity boards, and the give-away culture that is spreading across the states, it would be a surprise if the combined fiscal deficit of the Centre and the states is anything below 8% of GDP. It is only the low investment appetite of the private sector that has prevented the high levels of fiscal deficit from creating inflationary pressures. If investment demand does pick up over the next year, that buffer would be gone and the fiscal fudge would no longer remain unnoticed.
This is also a hugely unequal budget. It proposes to spend Rs 75,000 crore as income support for 12 crore farm households. Typically a rural household has five members. That means an outlay of Rs 75,000 crore on 60 crore people, or a rural benefit of Rs 1,250 per person. The minimum benefit to urban income tax payers is the removal of tax at 5% on Rs 2,50,000 of income in the Rs 2.5 lakh-Rs 5 lakh range. That is Rs 12,500 per head. In other words, this government’s giveaway is 10 times higher on the relatively well-off, urban income-tax payer than on the relatively distressed rural resident. This makes the budget iniquitous.
But from the point of view of realpolitik, this is entirely rational. Farmers are impressed by actual results on the ground, not spin. They might or might not take time out to watch or read about the Budget. But the urban lower middle class will certainly get to know about the bounty they are being handed out, and few care if it is stolen from their own future.
Winning elections is important. Making promises and vision statements to that end is fine at Budget time. But the demonstrated level of inequity and lack of ethics in the present budget are irresponsible beyond a little populism.