The Railway Budget presented by Mamata Banerjee in Parliament today (February 24) exposes a sharp deterioration in the performance of the Indian Railways.
Far from containing any vision for the future of the Indian Railways, Mamata's Budget speech sought to conceal gross failures through misleading announcements and gimmicks aimed at next year's Assembly elections in West Bengal.
Over 120 railway accidents have taken place so far during this financial year. In this backdrop it is inexplicable how the allocations for the Railway Safety Fund has been cut by Rs. 579 crore from last year.
Moreover, Mamata has strangely tried to shift the blame for railway accidents on to rail rokos and natural disasters! This shows the Minister’s distorted perspective on the crucial aspect of railway safety.
According to the Railway Ministry’s own estimates, over 1.7 lakhs Railway posts were lying vacant in 2009, out of which nearly 90,000 were posts related to railway safety. Mamata has kept completely silent on filling up these vacancies, which can provide job opportunities to unemployed youth.
The Railway’s operating ratio (the ratio of total working expenses to the earnings – a higher ratio implies deterioration), which was 90.5% in 2008-09 has risen to 94.7% in 2009-10. Such a sharp deterioration in just one year reflects the gross mismanagement of Railway affairs by Mamata who has spent more time in Kolkata plotting against the Left Front government in cahoots with the Maoists than in Rail Bhawan in New Delhi.
Gross Traffic Receipts in 2009-10 have fallen short of the budgeted estimate by Rs. 63 crore. Moreover, plan investment in Railways also fell short of the budgeted target of 2009-10 by Rs. 497 crore.
This clearly shows that Mamata Banerjee has not been able to implement the tall promises she made in the last Budget. In this context the grandiose announcements of projects ranging from hospitals and diagnostic centres, sports academies and musuems ring a trifle hollow.
By Mamata's own admission, many of her project announcements were made without the sanction of the Planning Commission. Their implementation therefore is highly suspect. This is further borne out by the fact that for 2010-11, plan investment in Railways is budgeted to increase by only Rs. 1142 crore, which amounts to a drastic fall in plan investment in real terms.
While the Railway Minister has made tall claims on laying 1000 km of new railway lines, it is shocking that the actual plan allocations for gauge conversion, doubling of railway lines and new rolling stock like wagons and carriages have been cut in nominal terms.
This squeeze in public investment in the Railways is accompanied by an unprecedented thrust towards privatisation in all areas in the name of PPP: from modernisation of railway stations, new railway lines, freight and passenger corridors, locomotive, wagon and container manufacturing, rail axle factory, parking complexes and bottling plants.
This wholesale privatisation programme for the Railways and thus opening up the entire sector for private profiteering will be inimical to the national interest. It appears as if the entire decision-making in the Railway Ministry has been handed over to the corporate sector.
But then, given Manmohan Singh's privatisation agenda, Mamata Banerjee's Budget is of a piece.
Showing posts with label Budget. Show all posts
Showing posts with label Budget. Show all posts
Wednesday, February 24, 2010
Monday, July 6, 2009
Aam Aadmi or Mota Seth: Whose Budget Is It Anyway?
Watching the “Budget Specials” today, I was struck by the monotony of the responses coming from most panellists. Most were circumspect. Many were plain “disappointed. Reason being that finance minister Pranab Mukerjee failed to enthuse the stock market. In fact the market tanked by 870 points on the Bombay Stock Exchange.
But once you crunch the numbers, it is evident that once again India Inc has been given more sweeteners than they deserve. For example, the series of direct and indirect tax concessions in the wake of the global economic crisis has led to the tax revenue forgone – taxes that India Inc should be paying - reach as much as Rs. 4.18 lakh crore (Rs 4.18 trillion) in 2008-09.
Rather than withdrawing these concessions to enable greater resource mobilisation and spending in critical areas, Mukerjee has chosen to extend these concessions for the entire financial year of 2009-10.
In fact, the abolition of the Fringe Benefit Tax and Commodities Transaction Tax will also adversely impact tax mobilisation. Despite the welcome increase in the Minimum Alternative Tax levied on corporates from 10 per cent to 15 per cent of their profits, the Budget is revenue neutral on the direct tax front and direct tax revenues are expected to increase by 7 per cent only, which is much less than the nominal growth of GDP.
Not surprisingly, India Inc is mighty pleased. HDFC Chairman Deepak Parekh proclaimed on a TV show: "I think I am overall very happy with the Budget." Stating that he did not see any reason for being negative on the Budget, Parekh noted that the Finance Minister mentioned the role of the private sector and private finance in the speech.
Indeed, looking at the fine print it comes as no surprise that contributors to the Congress Party's kitty have been rewarded in ample measure. For example, Mukesh Ambani has come out a winner – Mukerjee has restored the seven-year tax break on natural gas production. “We are very happy about the clarification as it ends the ambiguity," said PMS Prasad, President and CEO (Oil & Gas) of Reliance Industries.
Similarly, the finance minister's has extended fiscal benefits available to the IT-BPO sector under Section 10A/10B for one year to “help the industry mitigate the impact of the current economic environment and help India retain its competitiveness.” Translated in plain language it means companies like Infosys, Wipro and Mahindra Tech (Satyam) will continue with the tax holiday they have enjoyed for the past decade.
Prime Minister Manmohan Singh sees nothing wrong with granting largess to these companies, which have not contributed to innovation and have no patents to their names. Instead, he trotted out a lame explanation: “The main aim of the Budget is to minimise the impact of global recession,” adding that its focus was to ensure that short-term requirements of the economy as well as medium-term goals were achieved.
Really? Is foregoing revenues to the extent of Rs 4.18 trillion minimise the impact of the global recession? The Prime Minister may hail the Budget as an “admirable job”, but the hosannas are being sung by the fat cats on business channels and pink papers, not the much-vaunted aam admi.
“It is essentially a rural development-oriented Budget," claims the Prime Minister. And the likes of Montek Singh Ahluwalia, P Chidambaram, and Kapil Sibal – the neo-liberal cabal that guides government policy nowadays – are shouting from the rooftops that in the Budget handsome additional allocation has been made for inclusive growth and other flagship programmes like Urban Renewal Mission and National Rural Health Mission.
Those who had hoped to make a fast buck in these times are complaining that there was no announcement on privatisation of PSUs, banking “reforms” and throwing open the insurance sector to foreign finance capital. “Nothing that was expected has happened except for some bit of focus on infra. But he (Mukerjee) did not say anything about divestment, he did not say anything about insurance. All of that are having an impact on the market,” complained Saurabh Nanavati, CEO of Religare Asset Management.
But talk of the Budget being “socialist” or “populist” is sheer bunkum. In fact Parekh was being honest when he said, "You must understand that he (Mukerjee) mentioned the role of the private sector and private finance...Disinvestment will happen. The government needs more money...I don't see any reason for (being) negative at all."
In fact the “captains of industry” openly said on TV that disinvestment and other “reforms” were not mentioned in the Budget precisely because Mukerjee did not want to raise a storm in Parliament – he would do all this, and much more, without much fuss at a later date, preferably when Parliament is not in session.
So where does that leave you and me? Sure, some crumbs have been thrown to the middle class by way of raising personal tax exemption limits marginally. LCD TVs may become slightly cheaper and mobile handsets could go the same way. So what?
Looking at the big picture - After all, India is a billion strong country - the numbers tells us the Budget is grossly inadequate in meeting the challenges of economic recession, growing job losses and declining purchasing power of the masses.
The total expenditure is slated to increase by a mere 2 per cent of GDP only, essentially to meet non-developmental expenditures like interest payments and implementing Sixth Pay Commission recommendations. So this Budget neither provides a stimulus for growth nor meets the needs of “inclusive growth” for the aam admi.
While Mukerjee has failed to provide the resources required to stimulate the economy, the neglect of its role in terms of allocations is more significant in areas that touch on the lives of the mass of the people.
Crucial sectors, like agriculture and rural development, where the effects of the prolonged agrarian crisis and the agricultural growth slowdown of 2008-09 have been severe, have been provided little support in terms of Plan outlays. The required lowering of interest rates to 4 per cent on farm loans has not been done. Instead, only an incentive to repay loans on time has been announced.
The allocation required to implement the Right to Education is shockingly absent in the Budget. The increase in budgetary allocation for elementary education is less than Rs 200 crore. In fact the non-seriousness of the Government for the universalisation the Integrated Child Development Scheme (ICDS) is seen in the meagre increase in allocation of only Rs. 360 crore.
The allocation for the social security schemes for the unorganised sector workers is only Rs. 100 crore more than last year, belying the claims made by the Finance Minister. While the increase in minimum wage for the NREGA to Rs 100 makes sense in States where the wage rate is lower, a meaningful expansion of NREGA would have required a much larger allocation than the Rs. 2350 crore increase over what was spent in 2008-09.
Similarly, the Rural Health Mission has been allocated only Rs 1730 more than what was spent last year. And it is indeed unfortunate that the Finance Minister has given his stamp of approval to an increase in the price of foodgrains by Re 1 per kg for Antodaya families and a cut in the allocation of food quotas by 10 kg to BPL families in the name of the Food Security legislation. None of the promises made to women including the widow pension scheme has received increased allocations. All this even as the well off get tax exemptions, cheaper LCD TVs and, of course, BMWs.
Indeed, far from meeting the requirements of the people, the Budget will further widen the gap between the haves and the have-nots. Mind you, this is the first Budget of this government. There are four more to go. For the aam admi, the struggle to protect and improve his livelihood has just begun.
Yet the fat cats are whining. “Somehow I was thinking that the Railway Budget was a little populist. Now this one seems to have outdone that. Honestly, there seems to be too much of social spending," complained Saurabh Nanavati of Religare Asset Management. Yeh dil mange more?
But once you crunch the numbers, it is evident that once again India Inc has been given more sweeteners than they deserve. For example, the series of direct and indirect tax concessions in the wake of the global economic crisis has led to the tax revenue forgone – taxes that India Inc should be paying - reach as much as Rs. 4.18 lakh crore (Rs 4.18 trillion) in 2008-09.
Rather than withdrawing these concessions to enable greater resource mobilisation and spending in critical areas, Mukerjee has chosen to extend these concessions for the entire financial year of 2009-10.
In fact, the abolition of the Fringe Benefit Tax and Commodities Transaction Tax will also adversely impact tax mobilisation. Despite the welcome increase in the Minimum Alternative Tax levied on corporates from 10 per cent to 15 per cent of their profits, the Budget is revenue neutral on the direct tax front and direct tax revenues are expected to increase by 7 per cent only, which is much less than the nominal growth of GDP.
Not surprisingly, India Inc is mighty pleased. HDFC Chairman Deepak Parekh proclaimed on a TV show: "I think I am overall very happy with the Budget." Stating that he did not see any reason for being negative on the Budget, Parekh noted that the Finance Minister mentioned the role of the private sector and private finance in the speech.
Indeed, looking at the fine print it comes as no surprise that contributors to the Congress Party's kitty have been rewarded in ample measure. For example, Mukesh Ambani has come out a winner – Mukerjee has restored the seven-year tax break on natural gas production. “We are very happy about the clarification as it ends the ambiguity," said PMS Prasad, President and CEO (Oil & Gas) of Reliance Industries.
Similarly, the finance minister's has extended fiscal benefits available to the IT-BPO sector under Section 10A/10B for one year to “help the industry mitigate the impact of the current economic environment and help India retain its competitiveness.” Translated in plain language it means companies like Infosys, Wipro and Mahindra Tech (Satyam) will continue with the tax holiday they have enjoyed for the past decade.
Prime Minister Manmohan Singh sees nothing wrong with granting largess to these companies, which have not contributed to innovation and have no patents to their names. Instead, he trotted out a lame explanation: “The main aim of the Budget is to minimise the impact of global recession,” adding that its focus was to ensure that short-term requirements of the economy as well as medium-term goals were achieved.
Really? Is foregoing revenues to the extent of Rs 4.18 trillion minimise the impact of the global recession? The Prime Minister may hail the Budget as an “admirable job”, but the hosannas are being sung by the fat cats on business channels and pink papers, not the much-vaunted aam admi.
“It is essentially a rural development-oriented Budget," claims the Prime Minister. And the likes of Montek Singh Ahluwalia, P Chidambaram, and Kapil Sibal – the neo-liberal cabal that guides government policy nowadays – are shouting from the rooftops that in the Budget handsome additional allocation has been made for inclusive growth and other flagship programmes like Urban Renewal Mission and National Rural Health Mission.
Those who had hoped to make a fast buck in these times are complaining that there was no announcement on privatisation of PSUs, banking “reforms” and throwing open the insurance sector to foreign finance capital. “Nothing that was expected has happened except for some bit of focus on infra. But he (Mukerjee) did not say anything about divestment, he did not say anything about insurance. All of that are having an impact on the market,” complained Saurabh Nanavati, CEO of Religare Asset Management.
But talk of the Budget being “socialist” or “populist” is sheer bunkum. In fact Parekh was being honest when he said, "You must understand that he (Mukerjee) mentioned the role of the private sector and private finance...Disinvestment will happen. The government needs more money...I don't see any reason for (being) negative at all."
In fact the “captains of industry” openly said on TV that disinvestment and other “reforms” were not mentioned in the Budget precisely because Mukerjee did not want to raise a storm in Parliament – he would do all this, and much more, without much fuss at a later date, preferably when Parliament is not in session.
So where does that leave you and me? Sure, some crumbs have been thrown to the middle class by way of raising personal tax exemption limits marginally. LCD TVs may become slightly cheaper and mobile handsets could go the same way. So what?
Looking at the big picture - After all, India is a billion strong country - the numbers tells us the Budget is grossly inadequate in meeting the challenges of economic recession, growing job losses and declining purchasing power of the masses.
The total expenditure is slated to increase by a mere 2 per cent of GDP only, essentially to meet non-developmental expenditures like interest payments and implementing Sixth Pay Commission recommendations. So this Budget neither provides a stimulus for growth nor meets the needs of “inclusive growth” for the aam admi.
While Mukerjee has failed to provide the resources required to stimulate the economy, the neglect of its role in terms of allocations is more significant in areas that touch on the lives of the mass of the people.
Crucial sectors, like agriculture and rural development, where the effects of the prolonged agrarian crisis and the agricultural growth slowdown of 2008-09 have been severe, have been provided little support in terms of Plan outlays. The required lowering of interest rates to 4 per cent on farm loans has not been done. Instead, only an incentive to repay loans on time has been announced.
The allocation required to implement the Right to Education is shockingly absent in the Budget. The increase in budgetary allocation for elementary education is less than Rs 200 crore. In fact the non-seriousness of the Government for the universalisation the Integrated Child Development Scheme (ICDS) is seen in the meagre increase in allocation of only Rs. 360 crore.
The allocation for the social security schemes for the unorganised sector workers is only Rs. 100 crore more than last year, belying the claims made by the Finance Minister. While the increase in minimum wage for the NREGA to Rs 100 makes sense in States where the wage rate is lower, a meaningful expansion of NREGA would have required a much larger allocation than the Rs. 2350 crore increase over what was spent in 2008-09.
Similarly, the Rural Health Mission has been allocated only Rs 1730 more than what was spent last year. And it is indeed unfortunate that the Finance Minister has given his stamp of approval to an increase in the price of foodgrains by Re 1 per kg for Antodaya families and a cut in the allocation of food quotas by 10 kg to BPL families in the name of the Food Security legislation. None of the promises made to women including the widow pension scheme has received increased allocations. All this even as the well off get tax exemptions, cheaper LCD TVs and, of course, BMWs.
Indeed, far from meeting the requirements of the people, the Budget will further widen the gap between the haves and the have-nots. Mind you, this is the first Budget of this government. There are four more to go. For the aam admi, the struggle to protect and improve his livelihood has just begun.
Yet the fat cats are whining. “Somehow I was thinking that the Railway Budget was a little populist. Now this one seems to have outdone that. Honestly, there seems to be too much of social spending," complained Saurabh Nanavati of Religare Asset Management. Yeh dil mange more?
Friday, July 3, 2009
Indian Railways' Surplus Evaporates; Where Has The Money Gone?
Spending five days in a week in Kolkata to fight the Left Front government rather than behind her desk in Rail Bhawan in New Delhi, Mamata Banerjee certainly did not have any time to prepare the Railway Budget, which she presented in Parliament today. Not surprisingly, her Budget does not bear her imprimatur but that of the technocrats running Indian Railways.
So once again, as in other branches of the new government, neo-liberal thinking dominated the Budget-making exercise. This will include not only developing “50 world class” railway stations but go down the line, as it were, to cover even developing Railway medical colleges along with rail hospitals on public-private partnership (PPP) basis. Besides, there is the par for course tokenism like availability of 'Janata Khana', in which national and regional cuisines will figure on the menu.
Alarmingly, Mamata's first Railway Budget reflects a marked deterioration in the financial position of the Indian Railways. Lalu Prasad's Railway Budget of 2008-09 had reported a cash surplus of around Rs 23,000 crore. However, this surplus came down to Rs. 13,532 crore in this year's interim Railway Budget (February 2009) presented just before the Lok Sabha elections.
Now, in a short span of six months the surplus has come down further to just Rs 8,631 crore in the current Budget. Where has the money gone? Mamata owes an explanation for this serious deterioration of performance. Why has the cash surpluses of the Railways depleted so rapidly in such a short span of time?
To be fair, it seems the economic slowdown has adversely affected Railway revenues, especially from freight traffic. Estimates for Receipts have been revised downwards from the targets set by the interim Railway Budget presented by Lalu Prasad earlier this year, which Mamata Banerjee termed “unrealistically high” in her speech.
However, Mamata has failed to come up with any fresh ideas in tackling the situation and turnaround the declining revenue situation. Rather she has chosen to take recourse to the same flawed route of privatisation through PPP projects in a host of areas. Indeed, privatisation and outsourcing in the Railways has received a major thrust in this year’s Budget. Is this the beginning of the privatisation of Indian Railways?
Mamata's reliance on several PPP projects, from development of 50 “world class stations”, new freight and coach terminals, logistics parks, special purpose rolling stocks, perishable cargo centres etc., seems completely misplaced at a time of economic recession when private investment is hardly forthcoming.
Mamata admitted in her speech that out of Rs 3400 crore earmarked in the Annual Plan for 2009-10, for resource mobilization through PPP, “Rs 3300 crore would just not materialise”. The allocations for crucial areas like railway modernisation, safety, electrification etc are also inadequate.
Thankfully, there are some positive measures in the Railway Budget 2009-10 like no hike in passenger fares, Rs 25 monthly ticket for people earning less than Rs. 1500 per month or a special recruitment drive to fill up vacancies in railway posts for SC/STs, physically challenged, minorities and women.
We can only hope Mamata devotes more time to Indian Railways in the larger national interest and not limit herself to West Bengal politics. If the latter is more important to her, she must relinquish charge and let someone else take over. Indian Railways is too important to be left to the technocrats on the Railway Board.
Roger And Out
So once again, as in other branches of the new government, neo-liberal thinking dominated the Budget-making exercise. This will include not only developing “50 world class” railway stations but go down the line, as it were, to cover even developing Railway medical colleges along with rail hospitals on public-private partnership (PPP) basis. Besides, there is the par for course tokenism like availability of 'Janata Khana', in which national and regional cuisines will figure on the menu.
Alarmingly, Mamata's first Railway Budget reflects a marked deterioration in the financial position of the Indian Railways. Lalu Prasad's Railway Budget of 2008-09 had reported a cash surplus of around Rs 23,000 crore. However, this surplus came down to Rs. 13,532 crore in this year's interim Railway Budget (February 2009) presented just before the Lok Sabha elections.
Now, in a short span of six months the surplus has come down further to just Rs 8,631 crore in the current Budget. Where has the money gone? Mamata owes an explanation for this serious deterioration of performance. Why has the cash surpluses of the Railways depleted so rapidly in such a short span of time?
To be fair, it seems the economic slowdown has adversely affected Railway revenues, especially from freight traffic. Estimates for Receipts have been revised downwards from the targets set by the interim Railway Budget presented by Lalu Prasad earlier this year, which Mamata Banerjee termed “unrealistically high” in her speech.
However, Mamata has failed to come up with any fresh ideas in tackling the situation and turnaround the declining revenue situation. Rather she has chosen to take recourse to the same flawed route of privatisation through PPP projects in a host of areas. Indeed, privatisation and outsourcing in the Railways has received a major thrust in this year’s Budget. Is this the beginning of the privatisation of Indian Railways?
Mamata's reliance on several PPP projects, from development of 50 “world class stations”, new freight and coach terminals, logistics parks, special purpose rolling stocks, perishable cargo centres etc., seems completely misplaced at a time of economic recession when private investment is hardly forthcoming.
Mamata admitted in her speech that out of Rs 3400 crore earmarked in the Annual Plan for 2009-10, for resource mobilization through PPP, “Rs 3300 crore would just not materialise”. The allocations for crucial areas like railway modernisation, safety, electrification etc are also inadequate.
Thankfully, there are some positive measures in the Railway Budget 2009-10 like no hike in passenger fares, Rs 25 monthly ticket for people earning less than Rs. 1500 per month or a special recruitment drive to fill up vacancies in railway posts for SC/STs, physically challenged, minorities and women.
We can only hope Mamata devotes more time to Indian Railways in the larger national interest and not limit herself to West Bengal politics. If the latter is more important to her, she must relinquish charge and let someone else take over. Indian Railways is too important to be left to the technocrats on the Railway Board.
Roger And Out
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