Budget 2004 is an excellent attempt but difficult to implement within a short span of 6-7 months available said Prof. J.D. Agarwal, Chairman, Indian Institute of Finance, while delivering the 3rd Annual Public Lecture on Analysis of Union Budget 2004 at India International Centre Auditorium. According to Prof. Agarwal, Budget is pro-poor, and good for common man but would hit badly middle and upper middle class, would be inflationary, dampen the stock market and may not fully help achieve the budgetary objectives and thrust areas. However he feels if implemented effectively it would prove to be a boon for the Indian economy and lay new foundation for faster take off of Indian economy to solve its long standing economic but important problems.

Referring to his last year’s Public Lecture on Union Budget 2003 he said that he had concluded his lecture saying Budget 2003 was neither a good economics nor good politics. The budget did not take care of more adequately more than 70 crores people living in the villages and slums of cities, more than 26 crores people living below poverty line, and more than 38 crores illiterates. Each one of them had a vote to cast and elect like their counterparts who belong to other advantage category.

Addressing over 500 delegates, diplomats, academicians, bureaucrats and media, he said Finance Minister has shown excellent spirit to carry forward NCMP and the rightly identified thrust areas in his budget speech. He appreciated FM’s great concern for the poor; agriculture rural development, basic education & health, fiscal consolidation and fiscal devolution while remaining committed to strike a balance among three mutually reinforcing objectives of growth, stability and equity.

Speaking on positive features of the budget 2004, Prof. Agarwal appreciated Finance Minister’s preference of Development over security by allocating Rs. 25,000 crores of Rural Development Fund over the Interim budgetary allocation of this amount for defence. However security has also been taken care of him by increasing allocation of Rs. 12,000 crores said Prof. Agarwal. He feels the addressing of the regional disparities through various schemes and budget allocations and promotion of technology are other positive features of the Budget presented. He also appreciated the government’s concern for basic education and health and introduction of Education cess of 2 per cent. He feels assuring 100 days’ employment to the breadwinner in each family at minimum wage would take care of all people below the poverty line at one stroke.

However, according to him, the Finance minister has adopted an expenditure oriented approach than achieving objectives as clear targets have not been announced in the budget. No attempt to unearth the menace of Black Money and Money Laundering has been made in the budget. He feels that tax structure should have been made more rational and simple. Lop sided announcements, lacking balance in sectors and higher excise on match boxes and candles have no justification. These would also have negative impact on people at large. Thrust areas & goals such as Drinking water & electricity for all is too tall objective to be achieved in one year stressed Prof. Agarwal. He said that 57 Budgets and 57 Finance Ministers have not been able to provide the water and electricity for all till date, however if Mr. Chidambaram succeeds in fulfing this issue this would be the greatest achievement for him as a Finance Minister of this country.

Prof. Agarwal felt the Finance Minister has left various issues open ended such as what would be the impact of budget announcement on various objectives outlined in the budget. He said the budget is silent about overall fiscal deficit, India’s performance on external sector in terms of BOT & BOP, growth expectation in each sectors of economy, employment generation, position of Financial markets by year end, new investment domestic / foreign - FDI & FII is expected due to budget proposals. He strongly said that the Economic Survey should be realeased at least one week before the budget presentation so that people could know the performance of the last years budget proposals and the economy to appreciate his budget proposals.

Prof. Agarwal asserted that the Finance Minister should have adopted a balanced approach inter and intra sectors and focused more on non-tax revenues, stringent expenditure control, through using latest techniques of financial management, more specific in terms of targets/objective defining them in quantitative terms using econometric and forecasting techniques, give precise targets to achieve results and assure people of results. He felt that through the Budget, an attempt should have been made to unearth black money and curb money laundering and FM should have adopted a win-win situation for all rather than giving an impression of a lop sided focus on agriculture / rural development / basic education & health etc. and given a greater boost to Investment both domestic and foreign. Investment Orientation through Public Private participation alone can help solve various economic problems and bring prosperity, generate employment, uplift poor and improve the quality of life of people.

He says Mr. Chidambaram should have acted as a facilitator rather than provider involving people and masses in the movement of economic development so that this century may belong to India.

India would certainly emerge as a major economic strength in the world economy if the budgetary objective and thrust areas are achieved with the given budgetary allocations said Prof. Agarwal while wishing the Finance Minister success in his endeavor.