BUDGET LINE

---------- Forwarded message ----------
From: alok sharan <absharan24@gmail.com>
Date: Sun, Jul 12, 2009 at 9:37 PM
Subject: Fwd: BUDGET LINE (revised)
To: budget2009reactions@gmail.com

---------- Forwarded message ----------
From: alok sharan <absharan24@gmail.com>
Date: Sun, Jul 12, 2009 at 2:34 PM
Subject: BUDGET LINE
To: budget2009reactions@gmail.com

COMMENDABLE BUDGET : REQUIRE FINE TUNING IN THE SPENDING

 

Emphasis of the Finance Minister on Aam Aadmi (Aurat included), inclusive growth, infrastructure and spending on other popular schemes is commendable. The wish to achieve the inclusive growth by quantum increase in spending by the government is based on the approach of trickle down effect.

 

However, considering the long and complicated pipe lines of systemic procedures perforated with ubiquitous corruption of every hue and cries, mere increase in the allocation for these scheme will add little to the target group. An analogy of this is the poor water management system in the country where all the pouring in the cities ultimately goes in the drain leaving the cities underneath as dry as before. We must understand that just like proper rain harvesting system for optimal use of the rain water (precious resources, given little importance till date), proper delivery mechanism (read overhauling) is required to get the desired benefit out of the increase in the outlay in the budget at the cost of burgeoning fiscal deficit.

 

The other important theory a la Keynesian is providing stimulus by huge spending by the government on just anything. It appears that a consensus is emerging across the board to increase the government spending on infrastructure. However, the same should be fine tuned in the Indian context.  To revive the economy and to maintain the growth, we need to increase our demand across the various products segment first and then the supply side would be taken care by the industry and entrepreneurs without much help from the government in terms of excise and or other similar measures. On the contrary, by spending huge sum of money on infrastructure e.g. ports, airports, flyovers etc. we are increasing the capacities and facilitating the manufacturers, traders and exporters without any matching increase in the demands except related with the infrastructure industries.

 

To address these anomalies, spending in the areas with a long term view to create wealth for the common men and women e.g. housing projects, up-gradation of wasteland, smaller irrigation projects, afforestation in tribal areas, land reforms with the help of industry minus the mafia, is required. It is also necessary to provide the educated unemployed and poor people various respectable opportunities to earn their livelihoods otherwise left out from NREGA. The major beneficiaries from these would be the people forming the base of the social pyramid. On one hand it will help the industry and on the other hand it will equally work as various welfare schemes launched by the government. These measures if taken in the right earnest will not only provide the necessary inclusive growth and increase in the demands but also push the economy of the country into higher growth trajectory.    

 

 

Alok Sharan

New Delhi

 

(Views expressed herein is personal in nature and nothing to do with the orgainsation)