With a tax/GDP ratio around 13 per cent, the finance minister will be flush with tax revenue in 2007-08 and revenue estimates will be significantly higher than budget estimates. The promised fiscal deficit (3.3 per cent) and revenue deficit (1.5 per cent) shares of GDP will also be attained. This will allow the FM to claim adherence to terminal year FRBM (fiscal responsibility and budget management) targets in Budget 2008-09. Though growth has slowed, there will be ambitious revenue targets. The good fortune should have emboldened the government to introduce genuine tax reform and avoid sleight of hand in computing deficit figures, petroleum prices being one instance. Instead, in what could perhaps be the last budget before elections, the UPA will embark on a populist agenda, with its proclivities also leaning in that direction.Given the Common Minimum Programme, no one expected the UPA to liberalise FDI in retail, change Industrial Disputes Act, sell majority stakes in PSUs or open up pensions. But making government expenditure transparent, accountable and efficient should have been its cup of tea, since UPA leaders across the board are fond of quoting Rajiv Gandhi’s 15 per cent delivery figure and wax eloquent on decentralisation and panchayats. Nor would the Left have opposed such an attempt. However, the only movement forward has been on right to information. Nothing has emerged from the outlay-outcome exercise, now being quietly buried. No subsidies have been targeted, food, fertiliser or petroleum; and blaming states for non-identification is not an acceptable answer. Despite the Planning Commission labelling them as of doubtful utility, centrally sponsored schemes continue virtually unpruned. Several studies, not just CAG reports, have documented corruption and leakage in schemes like the National Rural Employment Guarantee. Euphoria about social and third-party audit has vanished. Notwithstanding these failures, Budget 2008-09 will have fresh expenditure promises in agriculture, rural development, education, health and water, with the caveat that apparent promises in budget speeches are not always matched by actual allocations in budget papers. Add to that the wooing of the rural sector through a huge debt write-off programme, with a grapevine figure that is a staggering Rs 90,000 crore. Plus the wooing of what is mostly the urban sector through a Sixth Pay Commission punch of Rs 36,000 crore. Railways have been asked to keep aside resources in their budget for the pay hike, which suggests implementation before, rather than after, the elections.The UPA didn’t like the NDA’s India Shining slogan. In response, and in the aam aadmi’s name, the UPA’s fiscal profligacy will leave India whining and future generations will pay. It is sad because many architects of the 1991 reforms are part of this government.
