Two Cabinet ministers delivered budgets in a crucial week. One merely thought of her state, the other for the entire nation, says
Shantanu Guha Ray
TRADITIONALLY, THERE is a three-day standard gap between the presentation of the railway and Union budgets in Parliament — punctuated by the Economic Survey. The practice is ancient. Decades ago the government is believed to have contemplated clubbing the Economic Survey and the Union Budget together, but the move was quickly shot down. This has all been for the good, because the mandatory gaps — in a week that is extremely crucial for the government — allow the financial markets to absorb the decisions and react appropriately.
Yet oddly, Railway Minister Mamata Banerjee could find no space for the advice Finance Minister Pranab Mukherjee offered at a meeting of the Cabinet Committee on Infrastructure. Banerjee sought approval for as many as 24 projects worth over Rs 15,000 crore in West Bengal that Mukherjee approved — but minus any financial assistance, and not before he had rebuked Banerjee for her incongruous style of functioning. “You have your focus on the West Bengal elections and are seeking loads of projects for the state. But that’s not the way a government functions,” Mukherjee had shot back.
When she saw that the die was pretty much cast Banerjee — popularly known as ‘Didi’ — managed to come out of her sulk and presented her maiden budget. And though her move was without substance, she made a valiant effort to make it appear like an exclusively West Bengal- friendly list. This has had many tongues wagging, with several keen budget-watchers finding her parochial stance repulsive and focus narrow.
Banerjee’s critics say — and not without reason — that Didi’s sole agenda is to grab the top job in the state; and that she will brook nothing that might stall her march to capture Writer’s Building, the seat of the West Bengal government. Informed sources say she had a generous ally in FICCI secretary general Amit Mitra — who is also chairman of the experts committee on railways — to pepper her speech with some B-school lingo.
West Bengal got 3 of the 10 new durontos, six new lines and a slew of express and suburban trains
By describing her budget as a “Vision Paper for 2020”, Banerjee made her game plan very clear. Anyone could see where her sights were fixed: on the 2011 Assembly elections. The nation could figure in later. West Bengal was showered with goodies — three of the 10 new Duronto trains, six new lines, five projects for doubling of lines and a slew of express and suburban trains. And while it is true that she has been keen to engage the private sector and invite domestic investment through the PPP mode, Banerjee had no clear idea about its implementation. She was also dreadfully vague when it came to explaining how the railways expected to add 25,000 km of new lines over the next decade, and where she hoped to raise the funds from. “The railways are going in reverse. It is a survey budget,” sniggered her predecessor, Lalu Prasad Yadav.
As Abheek Barua, chief economist, HDFC Bank says: “Her investment plans will work if she can crack the PPP model. But first the money needs to come in.” And he is right. Not only the Marxists, Banerjee’s proposals failed to enthuse even the markets: the BSE Sensex settled at 16,255.97 points, a loss of 30.35 points over the previous close.
In contrast, Mukherjee took care to avoid making any dramatic big bucks announcement, making his Budget a fine blend of tradition and continuity. Also, Mukherjee kept the fiscal stimulus measures firmly in place, thereby putting Asia’s third largest economy firmly on a 10 percent growth track. The FM vowed that the deficit would fall to 5.5 percent in 2010-11 from 6.9 percent last fiscal, and eventually to 4.1 percent in 2012-13. And his slew of initiatives — concessions to taxpayers, Rs 1.7 lakh crore core-sector largesse, extension of the green revolution to eastern India and the unorganised sector, the social security fund — effectively countered the scare resulting from the impending oil price hike.
Mukherjee’s focus found acceptance, unlike banerjee’s west bengal-centric proposals
“The symptoms of economic recovery are clear-cut now,” said Mukherjee, announcing a minor rollback of excise duty cuts. “The three fiscal stimulus packages have helped the process of recovery significantly. The improvement in our economic performance encourages a course of fiscal correction.”
SENSEX, THE benchmark index of shares on the Bombay Stock Exchange, closed the day 1 per cent higher in a muted response to what was viewed as a balanced budget. Last year, Dalal Street had crashed in the aftermath of Mukherjee’s budget. “This has nothing to do with what the Budget contains or what it does not. But yes, it has a great deal to do with expectations,” remarked Hemant Kapadia, a stock market analyst. And he added for good measure: “The minister pleased market participants by giving them what they most wanted — a clear plan to revert to fiscal prudence.” In fact, not outlining a roadmap for curtailing the fiscal deficit was one of the prime reasons for the 870 points plunge on Budget day 2009.”
Mukherjee’s focus found broad acceptance — quite unlike that of the West Bengal- centric Banerjee’s. Mukherjee said his objective was threefold: to ensure that the regime capable of putting GDP growth in the range of 9 percent was reinstated, put the government back on the path of fiscal consolidation and usher in the process of inclusive growth. This was Banerjee’s first budget and Mukherjee’s eighth, and the difference between the two was striking. While one talked the walk, the other sent down enough signals that he was going to walk the talk, as he has done seven times before.