A Pragmatic Plan: There's Something In It for Everyone

Mukesh Ambani / Jul 9, 2004, 00:00 IST

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Finance minister P Chidambaram has accomplished a difficult task with admirable finesse.

A Pragmatic Plan: There's Something In It for Everyone

<div class="section1"><div class="Normal">Finance minister P Chidambaram has accomplished a difficult task with admirable finesse. He has translated the welfare contours of the common minimum programme (CMP) into concrete initiatives in the Union Budget 2004. The Budget eloquently reflects the prime minister''s promise to Indian farmers. The special focus of the Budget on agriculture signals the government''s resolve to create a new and promising India in her rural hinterland. Doubling of farm credit, new insurance schemes, massive infusion in irrigation and rural infrastructure, accent on horticulture, floriculture and oilseeds, excise duty exemption for farm machinery, income-tax incentives for agro-processing and support for small farm businesses have all to be seen in this light. I am specially enthused by the provisions for education and healthcare. These provisions show that high priority has been given to building human capacity. By paying attention to education and health, the Budget recognises the importance of increasing the intrinsic worth of human resources. The Budget''s dedicated attempt at resource mobilisation for education reflects a serious concern to bring about a qualitative change in this area. Along with this, concurrent availability of funds for education for the needy, upgrading industrial training institutes, dedicated health insurance schemes for the poor and self-help groups and duty exemptions on rehabilitation aids and healthcare equipment indicate a positive tilt towards education and health, two very important areas. Both education and health have a direct bearing on the quality of life of people, and this is true for the present population as well as for future generations. Fiscal support and housing for the poor, employment creation, water management and rural infrastructure are all crying national imperatives. These areas are now getting the attention they rightfully deserve. Funding for pilot schemes to augment existing water storage bodies is a welcome initiative. Along with this, the emphasis on water harvesting underlines an awareness of the grave challenge India is likely to face in respect of availability and management of water resources. A remarkable feature of this year''s Union budget is the manner in which Plan allocation, government programmes, direct and indirect taxation and fiscal incentives have been integrated to give powerful stimulus to equity and economic growth. The Budget places renewed confidence in the public sector with equity and debt support to public sector undertakings in nationally relevant sectors. The finance minister has also addressed the issue of fiscal management skilfully. At one level, the tax-gross domestic product ratio is to be improved by marginally increasing service tax, expanding coverage of service tax, plugging tax leaks, restructuring capital gains tax and excise duties and developing a blueprint for targeting subsidies. At another level, the states are to be strongly supported in their fiscal consolidation by a debt-swap scheme and Central support for losses, if any, to move to the value-added tax regime. A bold step has been taken in raising income-tax exemption limit for individual taxpayers. Interest rate issues have also been dealt with deftly. It is obvious that Mr Chidambaram has come on top of the several constraints he faced in formulating Union Budget 2004. He has refused to be overwhelmed by daunting political challenges. To sum up, Budget 2004 reflects creativity in blending in people''s concerns with national interests and political reality. (The writer is chairman and managing director, Reliance Industries Ltd.)</div> </div>

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