CHENNAI: The budget for 2007-08 conceals the Finance Minister's failure to present any solution-driven agenda to handle the colossal crises the nation faces on the price front and in the agricultural sector.

On a benign view the budget lacks clear political direction save the use of words to fill the gaps in ideas and on a critical view the budget is a less than honest exercise as by a sleight of hand, it window dresses the budget, like many corporate CEOs do their balance sheets, in the world of commerce.

By elegant use of words, and quotes from Tiruvalluvar, the FM has sold the budget as `agriculture-focussed.' A closer look at the budget and beyond-speech of the FM shows how he is cleverer than transparent. The FM sets out an 18-point agricultural agenda in paras 43-65 of his speech. Of this, two items say that FM awaits or is considering certain reports on agriculture; seven items, like pulses mission, training farmers, reviving the `collapsed' agricultural extension work of 1960s are just announcements; seven more are existing schemes, with more or less increase in allocations and only two, Social Security for rural poor and Ground Water Recharge — actually, a successful initiative of Jayalalithaa during her rule, copied of course without acknowledging it! — constitute fresh initiatives. Excluding fertilizer subsidy, the total allocation for agriculture and rural development is Rs.50,122 crore, an increase of 25 per cent over 2006-07. But the eloquence of the FM gives the impression as if the allocation has gone up by many times.

By mixing budget allocations with banking funds, the FM has created the myth of a new deal for agriculture in the budget. For example, the restoration of water bodies for which, in three budgets taken together, the FM has allocated only Rs.100 crore. Yet, in para 47 of his speech, the FM says `a special plan is being implemented over a period of three years in 31 specially distressed districts in four States involving a total amount of Rs.16,979 crore. Of this about Rs.12,400 crore will be on water related schemes.' The "water-related scheme" has a budget provision of only Rs.100 crore. Again, it is not under implementation. It is to be funded, not by the FM, but by the World Bank and only Tamil Nadu has moved ahead for a WB loan of Rs.2,182 crore, other States are just discussing! A reading of para 47 would imply that the Rs.12,400-crore special scheme is a budget-funded scheme. So is the case with NABARD funded schemes. This sleight of hand cannot be detected unless one goes beyond the FM's speech. Surprisingly, in para 65 of his speech the FM himself had claimed that he had "devoted 15 mts or so" of his speech on agriculture as if the number of words, which decide the time to read them, is the measure of the deal given to agriculture! But on a comparison, he has not done less for agriculture in the past, with 1,635 words devoted to agriculture in the 2004-05 Budget and now 1,899 words — a mere 264 words more than in 2004-05 when agriculture was actually prosperous.

The FM has almost ignored three boiling issues of farmers. First, suicides by farmers due to rural indebtedness, about which he merely says that the Government is awaiting the report of the Radhakrishna Committee; second, the relentless decline in farm capital formation, which has fallen from 2.2 per cent in 1999-2000 to 1.9 per cent in 2005-06 mainly due to fall in public investment; and third, the decline in food production from 212 million tonnes in 2003-04 to 209 mt in 2006-07. In his 2004-05 budget speech, Chidambaram was so buoyed about our self sufficiency in food grains that he, like his predecessors in the NDA government too did, advised that the farmers must move to producing flowers, instead of wheat! But within the next 18 months, we went in search of wheat stocks abroad! What is the consequence? This leads to the crisis of price rise.

One of the reasons claimed for inflation is the higher prices in the global market. If the largest wheat eater goes into the world market to buy millions of tonnes of wheat, will global wheat prices fall? The FM has merely touched but not dealt with the issue of price rise. He does not utter one word about how the RBI buying $48 billion in the last 12 months to keep Rupee value at around Rs.45 per dollar has let huge stocks of money in the market and also kept the imported fuel and other prices high, resulting in dual impact on prices. While the RBI sucked out by additional CRR Rs.14,500 crore from the banks last month, it pumped in Rs.30,000 crore into the market by buying $7 billion in the forex market to keep the rupee value low. How could the Government control inflation when contradicting policies work to cancel out one another and the net effect is to accelerate the prices? If any single factor makes the major contribution to inflation, it is the export lobby which has kept the Rupee value at least Rs.10 above its present value. If the Rupee is 35 to a dollar, the inflation will fall to less than 5 per cent.

On the whole the FM has closed his eyes to the huge crises enveloping the economy. In other respects the Budget is just an annual exercise. The long-neglected rural and farming issues are becoming so critical, and so is price rise. The disastrous impact of not confronting these issues will impact on all very soon. Who can be happy with this budget, except, as the FM himself had said: dog lovers and of course, the dogs? Incidentally, Mulayam Singhs of the world of politics know, most of the dog lovers do not vote and the dogs do not have votes.

(The author is the joint convenor of Swadeshi Jagaran Manch.)

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