Administration & Management

It's Art of Governance & Not Commerce Alone

Budget 2011- 12 under Scanner


Already having presented the facts prior to budget, as to what I as a country man expected in the budget to be presented on February 28, 2011, and following the same by publishing salient features in the budget, probably now it’s time to comment upon it. It’s not due to the reasons that it required so much of time for analysis, but is just due to waiting for the dust to settle down, so as to get a clear glimpse of the events.

Having said and done all the things earlier, now I can say that ‘budget or no budget’, things would have remained more or less the same.  The fundamental feature of budget lacks any focus or any strategy of any kind (Chandrasekhar, 2011). Even on the crucial issue like that of ‘financial inclusion’, only lip service has been paid, rather it could be blamed to be biased more towards ‘financial consolidation’.

Expenditure as a ratio to GDP as proposed in Budget

Plan Expenditure when compared with that of 2009 – 10 rose from 4.6 per cent to 5.0 per cent in 2010 – 11 and has been budget to come down to 4.9 per cent in 2011 – 12. On the other hand non – plan expenditure in the same period has come down from 11 per cent to 10.4 per cent and projected in budget to carry on the downward trend and reach a figure of 9.1 per cent.

Reality: Decrease will automatically be forced to be much larger

This is being said due to the reasons that non tax revenue in FY 2010 – 11 which stood at Rs. 2, 20, 148 crore had received a contribution of the tune of Rs. 72,000 Crore from sale of 3G and wireless broadband spectrum. Deducting this amount, the non tax revenue of FY 2010 – 11 will rest at Rs. 1, 25, 435 crore only.

Discussion:

In presence of such a crystal clear scenario, which clearly projects fall in aggregate revenue [due to fall in non – tax revenue], how come the budget expects to see it rising to Rs. 7, 89, 892 crore in 2011 – 12 against Rs. 7, 83,833 crore in 2010 – 11.

Even this partial increase fails to directly point towards a source from where it will accrue. Though, it seems to be, projected out of an increase in tax revenue collection. This is being said as projected tax revenue collection stands at Rs. 6, 64, 457 crore in 2011 – 12 against Rs. 5, 63, 685 crore in 2010 – 11.

While a glimpse of budget exposes that while union finance minister proposes to raise additional revenue of RS. 11, 300 crore from increase in indirect taxes, he is giving away Rs. 11, 500 crore in way of direct tax relief. These figures expose a negative contribution of Rs. 200 crore in aggregate tax revenue.

This discussion is being stopped at moment simply after discussing a single issue. There are more issues like inflation towards which this budget seems to be contributing positively, Increasing credit supply to agriculture but reducing public investment in agriculture etc. are many other important issues that require discussion.

 

Note: I am now not writing it as part one or two as my experience says that before I could think of discussing next part of story, some new event important in nature gets born.

Always Yours—As Usual— Saurabh Singh

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