By Vishal Sridhar
Edited by Sanchita Malhotra, Associate Editor, The Indian Economist
A week before the general budget 2014, Prime Minister Narendra Modi confessed that in the coming days and months he will lose the love of the people only to regain them after 2 years. The bitter medicine started off with the price hike in the railway tickets and ended up with the General Budget 2014. Arun Jaitley’s maiden budget has drawn mixed reactions across the country. While the social activists are infuriated by the huge amount being allocated for the Statue of Unity, the Aam Aadmi is delighted to have got the opportunity to save more and purchase the electronic goods at cheaper rates. Allocating 200 crore for a Statue, especially during a time of financial deficit in the economy, injects stabbing sensation on the people. But on the other side, when throngs of Indians take pride in taking photos beside the Statue of Liberty, why shouldn’t the government make this ‘investment’ on the Iron man to boost the Indian’s Tourism sector? So the question is whether this is the perfect time for such investments?
The Budget might have got it wrong on Sardar Patel but not on the other areas. To start off, the primary reason for the economy being in a mess is because of the lack of confidence among the investors, both domestic and international. But the series of proposed investments on various sectors including rural development, educational, infrastructural development, tourism, and Agriculture and Manufacturing sectors could well revive the economy, if the proposals are implemented effectively.
Social Media played a huge role in the success of building the brand ‘NaMo’ and by allocating Rs 500 crores for Internet connectivity in villages, the brand is only set to penetrate deep into the rural areas. Also the Budget has promised to redefine the backwardness of the states. This is a huge benefit to the states like Bihar and Bengal and will help them to realize their dreams of getting special status from the centre.
Neglecting the agriculture sector is the last thing that any Government should do. And for a country predominantly based on this sector, there’s no scope for such thoughts. With industrialization and urbanization going strong around the world, the future wars will be fought on food. And India must use this opportunity to revive her glory days. Credit has always been one of the main drivers of our agricultural production. The budget has promised to give Credit Guarantee banking to the Farmers. Also the government has promised to give interest subvention of 3% a year (instead of 7%) to all farmers who repay short-term crop loans on time. This will force thrust on the commercial banks to start engaging more on this sector
Though Narendra Modi pitched his ‘Gujarat Model’ to get votes during the election campaigns, he did acknowledge the growing models of Tamil Nadu, Orissa etc and promised to learn from them. In fact in this budget, he has taken a step ahead by imitating ‘Amma’s inflation fund scheme. The Government is going to constitute a price stabilization fund with an initial allocation of Rs 500 crore to check on the inflation. Also Jaitley has promised to revive the Food Corporation of India, which plays a key role in tackling the food inflation.
Infrastructure is one of the key driving forces of the economic growth. Unfortunately, this sector suffered in the last few years due to various reasons from delay in project clearances to judicial interventions. Adding salt to the wound, the rising price level forced the RBI Governor not to cut the rates. This in turn increased the cost of capital and hence ruined this sector.
The Government has indeed started off well as far as this sector is concerned. The amount which is going to be spent on the capital expenditure has increased. And the idea of smart cities is encouraging. A lot of people are migrating from the rural areas to the urban cities in search of better livelihood. So it’s important for the Government to find ways to accommodate them. Either the Government should make the Agricultural sector attractive or find them better opportunities in the cities. As the Government seemed to have chosen the latter, they should pull off 100 Navi Mumbai’s in the coming years.
The Power sector in the country is in a clutter. And the allocation of Rs 1,000 crores for renewable sector schemes is a welcome move. States like Tamil Nadu, Gujarat, and Jammu & Kashmir have abundant potential for Wind and other renewable sources of energy. Again the high production costs of such energies have kept the investors away. This sector will reap huge benefits in the future. So it’s significant to use the huge amount allocated in the best way possible.
The coming months are going to be fascinating and if the Government fails to boost the confidence and improve the economic situations then ‘Acche Din’ will remain a dream forever.
An aspiring economist, Vishal Sridhar lives in Ashok Nagar, Chennai. He will be graduating from Loyola College in 2015. Apart from Economics, Indian Politics and her history fascinate him. He’s thrilled to scrutinize the NaMo Government and her affiliation with Raghuram Rajan. An enthusiastic learner, he loves to pen down his thoughts on the various economics and political issues. He takes life as it comes and strongly believes that everything in life happens for a reason. He wishes to travel across India to experience her rich culture and traditions. He’s very keen on interacting with people and loves to exchange thoughts on various subjects. Don’t hesitate to connect with him at FB or to drop an email at [email protected]