Government plans and economic reality have as much in common as the dinosaur and the donkey. Last year’s Union budget was a complete whitewash. All budget estimates were revised and fell below expectations. . The 7th budget 2012-13 presented to Parliament by MrPrnab Mukherjee, seems far from reality. Some mathematics here, some jugglery there, and some demograph to fill the missing links. The Government seems have lost its reality as a result concise road mapping seems to be missing. Government is unaware of the economy. Growth. World Trade. Policy. When all these ingredients of a budget are absent, it is a paper of calculations. Nobody knows what will happen over the next one year. . As a fall-out, we do not have a 12th Plan (2012-17) ready? There is no document ready, even though some figures are allotted for different sectors. The mechanism to run these Schemes has not been perfected. No Plan document. At the start of every five year Plan, the plan status begins. Consultations with various ministries begin. Finance Ministry holds Expenditure Finance Committee in case the threshold of the outlay is above Rs 100 Cr. Then, at the fag end of the year, Cabinet Committee on Economic Affairs chaired by Indian Prime Minister give their approval. Only then, new Schemes sanctioned for the 12th Plan period gets budgetary approval. If the amount is released on 29th March, you can very well imagine what type of implementation will result. One year of the Plan period would have ended. Regarding approval for existing Schemes, adhoc approval basis, Scheme money will be released. Even during the X, XI Plan period, the first year of the Plan was not in operation reducing the Plan periodicity to Four Years.
Our pundits in the Planning Commission faithfully will tell you that the average economic growth of the XII Plan will be around 9%. Forget, during 2011-12, the growth was 6.1%. Based on these figures, the budget of the Finance Minister for 2012-13 predicts an economic growth of 7.6%. The Economic Survey has forecasted a growth rate of 8.6% for FY 14. If these statistics were to be proved right, the last three years of the XII Plan should post a definite growth of over 9.5%. Growth rates are predicted, fiscal deficit are targeted, but like the uncertain monsoon, they are never the conjuncture of the Finance Ministry. Who bothers? Given the world draught in economic growth and political paralysis in India, resistance to reforms, it is doubtful if our growth pace can outpace the predictions of the Government.
India needs Foreign Direct Investment to fund infrastructure projects. With our craze for social sector schemes, there is hardly any money to build capital assets. With hardly any policy that suit foreign investors on vexed issues like Policy and promotion, why would any investor be willing to invest in India, where continuity in Policy, in Tax Laws, Company Law, change even with retrospective effect. Vadafone is a classic example of this. Political high handedness which drove industry out of West Bengal made bad publicity. Odisha’s Posco project which would produce steel which is in short supply has been outliving the long delay of Envoironmental Ministry to give its approval, only to find it quashed by the National Green Tribunal. As it is, industrial development is concentrated in a few States of the Country. Social and economic inequality will come to the fore in these states where political reasons outweigh developmental needs. China has grown and is growing, because it is easy to get a permit there than in India to get a project on stream.
In case, political indecisiveness continue, we may see a vacuum in FDI inflows!
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