Mukherjee’s task of putting together a reasonably good budget under the circumstances has been made even more difficult after the public admission of the existence of a ‘governance deficit’ by no less a person than his own cabinet colleague and former finance minister P. Chidambaram. Prime Minister Monmohan Singh’s latest description of the situation as ‘an ethical deficit’ sounds even more foreboding. The PM had put ethics before governance.

For the first time in the annals of annual government budgeting exercise in independent India, the public speculation and enthusiasm over possible provisions, new taxes and exemptions is totally missing. Instead, a spectre of a possible official crackdown on big business houses as a fall-out of the 2-G spectrum allocation scandal is haunting the industry. Reliance Com, Tata Teleservices, Unitech, Essar, Videocon, Swan, Singtel, Telenor and several others are already under the scanner of the Central Bureau of Investigation. On the other hand, the public faith in the government’s revenue and expenditure departments and tax compliance machinery seems to have vastly eroded as the one after another financial scams unfolded in quick succession in the last 12 months, pointing figure at a vicious minister-bureaucrat-business baron nexus.

The corruption in the government and business, black money menace, hawala money transfers, illegal Swiss bank accounts and the constraint in ensuring a cohesive operation of the union cabinet under a coalition system are standing in the way of good governance. The Prime Minister, Dr. Manmohan Singh, himself had admitted the weaknesses in the system at his latest meet-the-press programme with the electronic media. That such a press meet by a prime minister just before a budget session of Parliament is unprecedented. It exposes, if anything, the gravity of the situation facing the country and the government’s panic reaction to the growing public criticism against the administration’s hands-off attitude towards corruption. These recent developments have robbed the general public of the excitement over the forthcoming 2011-12 budget. The Transparency International’s extremely poor ranking of India (87th) branding it as one of the world’s most corrupt countries says it all. The poor, the common man, the honest salaried persons and the socially neglected senior citizens, who form about 75 per cent of the country’s population feel they are being cheated by persons at the helm of the government and administration.

The growing inflation, in most cases due to reduction of traditional state subsidies in sectors such as food, fuel and fertilizer, falling real income, fewer jobs in the government sector, growing exploitation of the educated job seekers in the private sector by employers and the lack of social security for the jobless, the underemployed and the old are staring in the face of the society, sharply divided between the club class and the dominant weaker sections earning less than Rs. 100 per day. Although the national budgets are generally seen as ‘exploitative’ by the business community and the middle class, they provide little for the least vocal and ever struggling common man, the less fortunate old and the incapacitated. Will the 2011-12 budget be any different from the past budgets for this much neglected, habitually silent majority of the society?

In fact, the challenges of the time provide a great opportunity for the government, the prime minister and the finance minister to produce a national budget to soar up the spirits of this hitherto neglected section, who is taken for granted by the country’s corrupt and heartless government, quarrelling parliamentarians and insensitive judiciary, especially at lower levels. It is not that there exists no scope for an innovative national budget under the present financial constraints and rising government revenue deficits. For instance, the government could reward the honest tax payers and the TDS-wallas with small cash benefits for paying higher taxes than they paid in the previous assessment year. Such benefits should take into account the inflation factor in the consumer price index. Even a government dearness allowance, though enjoyed by a privileged few, is taxed.

Similarly, the insurance regulatory authority could ask insurers to introduce a whole-life medical insurance policy at concessional rates for senior citizens and use a part of the profits earned from corporate group medical insurance and other general category medical insurance policies to subsidise the losses on account such old age medical insurance policy. Senior citizens may also be allowed tax exemption on a single-car insurance policy premium, medical expenses and travel up to a limit. Non-pensioner senior citizens or those receiving fixed pension below, say, Rs. 4,000 per month and surviving on interest income from senior citizen deposits with post offices, banks and financial institutions could be allowed a lower TDS rate. Such measures will hardly have any visible adverse impact on the government’s aggregate revenue collection. On the contrary, it will certainly boost the spirits of the less privileged old, who are increasingly made to find themselves as a social burden driving them to turn anti-establishment.

There could be other small gestures as well in the 2011-12 budget for the poor and the common man, who form the backbone of the country’s democracy and electoral system. But for their participation in the assembly and national elections, Indian democracy would have been a sham. The rich are rarely seen standing in the queue with their domestic servants and drivers to cast their votes in the political franchise. Mumbai’s Malabar Hill, Cumbala Hill, Peddar Road, Marine Drive and Cuffe Parade, Koltata’s Old Alipore and Delhi’s Golf Links boast among the lowest polling turn-out rates in the country. These areas are inhabited mostly by the rich and famous.

The rest of the budget exercise are just a routine – an admixture of revenue collection, other resources generation and budget allocation and the use of soft and sweet words to hide unpleasant hard facts. The size of the next financial year’s general budget would be close to the whopping Rs. 13 lac-crore mark. About 50 per cent of it will go to service the national debt – both internal and external. With another 20 per cent allocated for annual defence expenditure, the government is not really left with much funds for charity or out-of-the-box measures for the benefit of the common man as well as making investment in inclusive growth. This is especially so in view of the government’s burgeoning administrative cost, which eats up almost 85 per cent of annual plan expenditure leaving only some ‘peanuts’ for the targeted beneficiary.

The high budget deficit – projected as 5.5 per cent in 2010-11 – despite the government’s shrunken expenditure in high cost projects in several sectors, which have been privatized, increasing earnings from tax and non-tax revenues, spectrum sale and from the sale of public sector shares, and falling subsidies as percentage of total expenditure, is a cause of major concern. Almost every sectors of the economy, including industrial and core activities such as power generation, housing, infrastructure, mining, telecommunications, steel making, civil aviation and banking and insurance and social sectors such as education and healthcare, are privatized.

Yet, the government’s expenditure is constantly shooting up. Costs of government projects and programmes are getting increasingly inflated – as it was witnessed in the last commonwealth games – and revenue prospects missed to provide for corruption. The revenue that should rightfully belong to the government as in the case of 2G spectrum sale is going into the pockets of businessmen, politicians and bureaucrats. Will the forthcoming general budget address the key issue of corruption by cutting the flab and seasoning the corrupt ministers and their departments? Sadly, the union finance minister alone may not have the answer. (IPA Service)