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Budget for the farmer and the middle class: Poll tidings |
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B.I. Saini
The massive loan waiver for farmers and the largest ever bonanza for the middle class announced in the Union Budget by Finance Minister P. Chidambaram indicate that the Congress-led United Progressive Alliance (UPA) may be preparing for early elections. In any case, 2008 is an election year with as many as 10 states having Assembly elections during the course of the year. Of course, as Chidambaram said after presenting his budget targeted at all sections of the people, every year is an election year so far as the budgetary exercise is concerned. However, it is certain that in his earlier four budgets as Finance Minister in the UPA government, Chidambaram did not go all out to benefit the farm sector and the middle class as he has done this year. In earlier years, the recipients of his budgetary measures were primarily industry and the stock markets.
Of course, there are pros and cons of the concessions he has announced in the budget. While the loan waiver of Rs. 60,000 crore for small and marginal farmers will give them instant relief, the question of building an environment and system where they do not need such bailouts has not been effectively tackled. The problems Indian farmers face are primarily because of increasing input costs and low agricultural produce prices, which have not gone up proportionately. This is because of a variety of factors including global ones such as the developed countries’ tactic of heavily subsidizing their agriculture while expecting farmers in developing countries to face competition. The level of subsidies for the farming sector in the United States and Western Europe is far higher than what the Indian farmer gets.
That the quantum of concessions announced by Chidambaram was unexpected is shown by the fact that the opposition including the BJP-led National Democratic Alliance and the parties assembled under the banner of the United National Progressive Alliance (UNPA), as well as the Left parties, which are supporting the Manmohan Singh Government from outside, have been in a quandary on how to attack the budget proposals effectively. In the circumstances, they have had to resort to nit-picking to slam the budget. The BJP’s discomfiture is shown by the fact that its Prime Ministerial candidate Lal Krishna Advani has raised the issue of alleged communal overtones of the budget, a charge which cannot be sustained as helping the deprived segments of the population cannot be taken exception to.
The Manmohan Singh Government will face another test when the question of operationalisation of the nuclear deal with the United States comes up in a few months time when India-specific safeguards are worked out with the International Atomic Energy Agency (IAEA) and the time comes for getting a waiver from the Nuclear Suppliers Group (NSG). The Left parties have already made it clear that under no circumstances they will agree to the government moving ahead with the nuclear deal. While they are keeping lines of communication open with the Manmohan Singh Government, their basic grouse is that the deal will result in strengthening of relations with the United States, to which they appear to be pathologically opposed. They are not willing to draw any lesson from China’s building relations with the United States and other western countries with the objective of building its economic clout, in which it has succeeded to a large extent.
The time of reckoning for the UPA government is expected to come soon after the end of the budget session of Parliament and the expiry of the June 30 deadline set by Finance Minister Chidambaram himself for implementing the loan waiver scheme for farmers. How effectively the loan waiver is implemented will no doubt have a bearing on the final decision.
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