Is the Union Budget 2013-14 good for India? Ambedkar University's associate professor of Economics Surajit Mazumdar shared his perspective in an interaction with IBNLive readers.
Q. Is the Union Budget 2013-14 good for India? Asked by: Kamya
A. The Budget does not seem to address the fundamental problems confronting the economy, which include a unsustainable current account deficit, slowing growth and investment, high inflation and a majority of Indians trapped in a low income situation. The budget does not address the roots of these problems which lie in excessive concentration of spending ability in the hands of a small segment of the private component of the economy.
Q. Neither reformist nor populist. Your views. Asked by: laxman
A. It is by no means 'populist' in the sense the term is usually used. Food, fertilizer and fuel subsidies are being held down or reduced and expenditure on social services too (since they were already cut substantially last year, a sleight of hand is being used to make the expenditures budgeted appear as large increases).
Q. Is the proposal to tax the super rich justified? Asked by: Rohan
A. In fact the rich should be taxed far more than has been proposed because revenues are desperately needed to expand expenditures.
Q. Is it practically possible for the minister to achieve 4.8 per cent fiscal deficit target? Asked by: Rohit
A. The problem is he may achieve it by the method used last year - which was to cut expenditures below budgeted levels in response to inadequate revenue growth. Since the revenue expectations seem to be optimistic, exactly the same thing may happen this year too.
Q. What will be the implications on the Indian economy? Asked by: DK
A. By not addressing the fundamental problems facing the economy, the budget is pushing the Indian economy closer to the point where it become vulnerable to a major crisis and those who have not benefited from the growth so far may have to pay the biggest price for that. Please note that the current economic situation is extremely grim whichever way one looks at it.
Q. What will be the impact on taxes? Asked by: Priya
A. Not too many changes have been made to taxes and therefore tax revenues this year may also fall short of estimates as happened in 2012-13.
Q. What steps would you have taken if you were to frame it? Asked by: Tanya
A. I would have firstly taken measures to raise tax revenue from direct taxes particularly by raising them from the rich and the corporate sector and expand expenditures in areas where we have serious deficits - agriculture, social sector, infrastructure. This would also have stimulated private investment even while shifting expenditures from unproductive and import-intensive forms (like gold) to more productive and domestic production enhancing forms and helped move towards increasing supplies of essentials like food.
Q. Was this a huge opportunity missed? Asked by: Sonia
A. It was a opportunity missed to start steering India away from a course where it is heading towards a serious macroeconomic crisis. This course has brought us to a point where - growth remains low,investment depressed, inflation high and the current account deficit large - we may not be able to in such a situation keep on attracting foreign investment from abroad to bridge the payments gaps. We may not get too many chances now before that befalls us to reduce our dependence on such investments, the only viable long-term solution possible.
Q. What will be the impact on foreign investors? Asked by: Deepak
A. Foreign investors may today be happy that the fiscal deficit has been kept in check without raising taxes too much. But if the result of the measures used for this is to maintain the situation of depressed growth and investment (because of inadequate public expenditure), high inflation (because of rise in fuel prices and cuts in subsidies), and a high current account deficit (because of no measure to curb unnecessary imports), the same foreign investors may start taking their money out of India. That is the crisis we must fear.
Q. India's first women's bank to be set up. It will be a public sector bank...applaudable decision? Asked by: leena
A. One of the few saving graces.
Q. How do you rate the Budget? Asked by: Raj
A. Extremely poor because it does nothing to address the long-term employment and income crisis facing the majority of Indians and nor does it respond to the need to deal with the serious macroeconomic difficulties of the economy.
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