The steps that have been taken in the Union Budget to give a boost to the sluggish agricultural sector is a welcome shift from the reform minded Finance Minister Palaniappan Chidambaram as it will ensure that the country’s growing economy brings more benefits to millions of poor people who remain outside the loop of India shining. By past standards this year’s budget may not live up to be a ‘dream budget’ but politically this may turn out to be a crucial step for the Congress led UPA government to take a realistic look at the state of the country’s economy. Remember India Shining does not mirror the real India—the millions who remain outside the mainstream of economic growth. The BJP led NDA government paid the price for its India Shining Campaign when actually India was not shining. In that sense this year’s budget is more measured and fine tuned towards a more inclusive growth mantra. This is a step in the right direction.
The measures promised to check inflation should ensure that those in the periphery of economic development will not be adversely affected because at the end of the day, inflation takes its maximum toll on the poorer section of society. Given the Finance Minister’s emphasis on ‘inclusive growth’ and the focus given to agriculture, healthcare and education sector, the response of the market has not been too pleasing. The stock markets gave a virtual thumb down to the Union Budget. In-spite of what the captains of industry may feel about their disappointment, it has to be understood that the Finance Minister or the Budget for that matter does not belong the Industry and Service sector alone. As Chidambaram has rightly gone on record making the point that Industry and services have done well, while referring to the 9.2 percent growth in the Indian economy forecast for this fiscal, fuelled mainly by these two sectors.
And therefore the attention being given to agriculture has to be accepted as part of the overall growth of the Indian economy knowing fully well that this sector alone supports nearly two-thirds of India’s population. In fact the figure that India’s farm sector has grown at an average rate of less than 2.5 percent in recent years is way behind the overall economy, which is racing ahead at around nine percent. Therefore it makes sense to go in for higher spending on the farm sector in order to boost the socio-economic well being of the country’s vast farming community and also to ensure that the country is self-sufficient in food.
One of the paradoxes of the reform era is that even though economic liberalization has led to a broad upswing in growth rates, there has been no significant dent made in the country’s poverty profile. For a developing economy like India’s, liberalization and reforms has to be guided by some form of government intervention whereby market forces can be channelized in a way that would alleviate poverty at least to a respectable level. Mere income growth should not be seen as indicative of the well being of a society. Hopefully the latest budget exercise will be able to address on some of the important concerns and most importantly to ensure that economic growth is inclusive of all sections of people.
