Budget 2015 - Consolidation for Cooperative Federalism

The supporters of BJP would have liked any kind of budget Jaitely presented. The supporters of opposition parties too are duty-bound to find faults with it even if they are convinced that this is a good budget.

I too may have my own biases. Please feel free to check me wherever you find me biased.

I started listening to FM Jaitely reading out his budget 2015 with a lot of expectations generated out of the hype created by electronic media. Raising of income-tax exemption limit, raising of limits under section 80-C etc. were but some of the things I was expecting while listening to the Finance Minister attentively.

I must admit that I was disappointed. And I cannot blame it on media alone for this disappointment. FM Jaitely himself had stated, while presenting his maiden budget last year, that he wished to give more exemption which he could not, that being his first budget.

When the FM finished his speech, I realised the compulsions that did not allow him to be liberal like last year.

I realised that the FM had forgotten to mention the much-publicised key project of PM Modi i.e. Smart Cities. I realised that no budgetary allocation was announced for it. It was futile then, to expect any further tax exemption for repayment of home loans or interest payment thereon which experts in media was kind of guaranteeing to us!

I then linked it with an interview of former FM Yashwant Sinha, wherein he expressed the state of Indian economy as not promising for various reasons like 

a). The Govt. is committed to the fiscal discipline that does not allow making funds available through fiscal deficit;

b). Despite all efforts by the Modi Govt. so far, Make in India is not getting too many buyers so far resulting in not too much of FDI coming in; Jaitely too mentioned that PPP model for different projects is not picking up;

c). Domestic saving that used to be at 37% level during Vajpayee regime has come down to around 30%; 

And I realised there was one more reason not mentioned by Mr. Sinha but it did tie FM Jaitely’s hands. That is

d). Sharing 42% of centre’s revenue with states against 32% shared so far.

Courtesy: The Telegraph

I also realised that despite all these limitations FM Jaitely has done well.

He had to kind of shelve the Smart Cities project and some other ambitious projects. He could also not give more money to consumers for consumption so as to boost the economy through demand.

But he sent positive signals to the Corporate world without actually compromising on the revenue from Corporate Sector.

He also did a lot for the rural India and the poor. Some of these initiatives are Atal Pension Yojna, Insurance of upto Rs.2 lakh against a premium of Re.1/- per month. 

He also did not compromise on various long term infra projects like housing, ultra mega power projects, and upgradation of schools etc.

And all this, despite transfer of about 1.78 lakh crore of centre’s share to states. 

Hats off to the co-operative federalism!