New Delhi, March 1 : Former Finance Minister Yashwant Sinha has termed the Budget presented by Finance Minister P. Chidambaram as a 'populist' one and one that is a perfect 'recipe for long-term economic disaster'.
Sinha who held a Budget discussion meeting with chartered accountants, economists and business journalists, said he is in a position to read between the lines and understand the 'fine print'.
He further added that Chidambaram has ensured that the next Government inherits all the 'burdens' of the economy.
"If you want me to sum up, I can tell you that this is a very populist Budget, something that has been given ahead of the elections. Basically, he has tried to win the votes of various segments and has left the burden of the Budget on the forthcoming Government. He has plainly shirked off his responsibility and duties as a Finance Minister. You can be happy that your income tax liability has gone down; it will be a very short-term gain, a very short-term satisfaction. This budget is a recipe for long-term economic disaster," said Sinha.
Sinha said that the fifth and last budget of the United Progressive Alliance (UPA) before the general elections in 2009 was a populist budget, but no one expected that the economy would be sidelined to this extent.
Sinha further expressed his dismay over Chidambaram's silence on how funds would be garnered for the proposed waiver of loans for small and marginal farmers that he has mentioned in the budget.
"Can any Finance Minister be so irresponsible that he talks about an amount which is to the tune of Rs. 60, 000 crore and does not even mention the sources of funds? This is precisely where the difference between an election-manifesto and a budget lies. When a party declares its manifesto, it is not bound to disclose the economics behind it; it is based on mere promises. But, when a Finance Minister presents a budget, it is expected out of him that he talks about realistic things and also shows a way to achieve them," said Sinha.
Sinha also pointed out that a close study of the budget would reveal that the short-term borrowings of the Government are on the rise, which was not a good sign for the economy.
He also charged the Finance Ministry with not taking any concrete and bold steps to hedge the Indian economy against global recession and slowdown. The budget was not at all 'far-sighted', he added.
Chidambaram announced tax sops for women and senior citizens. He left corporate tax rates unchanged, but said he was raising a tax on short-term capital gains, aimed at share transactions, to 15 per cent from 10 per cent, helping send the stock market down more than 2 per cent.
The budget also promised an increase in the allocation of funds towards the Indian defence sector, one of the most closely tracked in the world.
As for farmers, Chidambaram proposed extending crop insurance schemes and boosting tea, cashew, coconut and pepper sectors while 200 billion rupees was set aside for irrigation. Spending on the rural job guarantee scheme is expected to rise 60 billion rupees to 160 billion rupees.
The budget also included an allocation of fund for the north-eastern states of the country, especially to deal with the border area infiltration problem.
Chidambaram said that, while he was confident that the country's economy would grow by 8.8 per cent in the fiscal year ending on March 31, there were risks from turbulence on global financial markets and from rising oil, metals, wheat and rice prices world-wide.
He pledged higher spending on health and education to spread the benefits of an economic boom beyond the cities to rural voters and proposed raising the income tax threshold. Duties on small cars and two-wheelers will be cut to boost manufacturing.
The budget mentioned that the fiscal deficit would fall to 3.1 per cent of Gross Domestic Product (GDP) in 2007-08, beating a target of 3.3 per cent. The deficit target for 2008-09 would be 2.5 per cent, below a 3 per cent target enshrined in law.