The national government’s budget, 2015-16, has none of the AAP agenda on its table. Its performance parameters are different, most of the problems are acute and delivery needs are urgent since the earlier entity did not perform for full three previous years before the hugely BJP-led NDA government took charge in May end, last year. The previous government was almost on an autopilot. Massive theft of important natural resources – from coal, iron ore, bauxite, airwaves to energy –, poor defence preparedness, falling domestic production, crash of domestic currency, rising gold import and weakening monetary system put the government into a more defensive situation. There was no easy way out. The Narendra Modi government, which has already spent almost 15 per cent of its 60-month tenure, is yet to take any major step to change the national scene. The first full budget of 2015-16 is billed to bring about a rapid change to rebuild the economy, alter foreign policy focus and strengthen the defence. However, AAP leader Arvind Kejriwal’s massive victory in Delhi, winning over 95 per cent of the Assembly seats on the simple promise to lit the life of the ordinary citizens and to severely tackle corruption that is enriching some at the cost of large others, has shaken the Modi government’s confidence, at least for now, and its full-budget exercise is focusing more on macro agenda than on micro issues. BJP had won all the seven Lok Sabha seats from Delhi in May last. Earlier this month, it managed just three out of Delhi’s 70 Assembly seats. Congress was totally wiped out. BJP had a massive credibility loss in the capital.

In fact, Modi is not known to be sitting on piles of extra money to subsidise food, electricity, healthcare, education and the social sector. It is trying to cut government costs on them. It is running huge budget deficits. The mid-year international oil market price crash, which has started rising again, lower inflation growth, higher tax collection and cut in government expenditure had little impact on the current year’s budget deficit. The massive capital market surge over the last several months did not improve the picture of the government’s disinvestment sale of PSU stocks. The proposed airwaves sale may be further delayed as some of the service providers are planning to move the court to secure stay orders against the auction as the government has revised the base auction prices upward to mop up close to Rs. one lakh crore from the sale to cut on budget deficit. The industry move is unlikely though not impossible.

The new series GDP figures suggest stepped-up growth but only in the statistical sense. The absolute figures little changed or, as though, some of them look a little lower than the old numbers. The substantial fall in global crude oil prices was good news. This had a positive impact on the wholesale price index though the retail consumer price index is moving up. As the Budget day nears, various sectors are lobbying hard for lower taxes and duties while others want the government to ensure a stable and predictable taxation regime.

The groups and consultants lobbying for MNCs want the government to bring in clarity on taxation in case of sale or indirect transfer of Indian operations. Also, there exists a solid case for further incentivising financial savings for individual taxpayers. The finance minister’s immediate concern is to stick to the budgeted fiscal deficit figure for this year. At the same time he is under pressure to cut down inflation and reduce subsidies. The linkage of auto fuels with international prices by the previous government has helped the government. But, the need for funding the defence, environment improvement and the overhauling of the infrastructure will substantially raise the government expenditure.

The deficit reduction, the better management of India’s external trade, big push to the foreign direct investment in a whole lot of areas, including electronics, defence and infrastructure, fund for ongoing Swacch Bharat, Ganga cleaning, e-governance and investment in the social sector will substantially boost the government expenditure. The gross budget expenditure could go up to Rs. 20 lakh crore, including over 30 per cent in debt servicing, in 2015-16. The government is advised to spend less on subsidies to make the budget more productive. And, that makes its task totally opposite AAP leader Arvind Kejriwal’s pro-people stance. The government is keen see the economy in 2015-16 growing by around 8 per cent. At the same time, the government is trying its best by blocking DGS&D purchases and making other spending cuts of around Rs.91 billion to keep fiscal deficit target at the projected level of 4.1 percent of GDP. Rightly, or wrongly, the Kejriwal philosophy and ways does not seem to be impacting Finance Minister Arun Jaitley’s first full budget making exercise. (IPA Service)