Imphal, July 06 2009: The same Government has been returned to power.

This Government is led by the party which introduced path breaking economic reforms in this country.

It is also led by the person who first introduced these reforms as Finance Minister of the country.

The world now faces global slowdown unprecedented for the last fifty years.

The domestic economy as well is marked by many internal slowdowns.

The overall growth rate of the economy is now such that something which could be achieved in about eight years would now require about twelve years.

The industry sector is not doing well.

The agriculture sector is in a non-growth scenario.

Superimpose on these the absolute decline in exports and the rise in prices of food items.

Aroused Expectations: All these circumstances demand that the Government of the day rises to the occasion.

So naturally the entire country was looking forward to this budget � the conscientious section was looking for innovativeness to address the new challenges of economy, the common man was looking forward for reliefs on the prices of food front, and the industry sector (especially manufacturing part of it) was needing a new impetus.

These were the minimum requirements for putting the economy back on the growth trajectory.

The Budget: It is in this background that Pranab Mukherjee presented the Union Budget for this fiscal today in Parliament.

He identifies three challenges being faced by the economy today.

First, there is the urgency for taking the economy back on the high growth path.

Secondly, he recalls the Eleventh Five Year Plan orientation for inclusive growth.

Thirdly, he speaks of the need to "re-energise" Government.

Lack of Lustre: We need to evaluate how far the policies accompanying the budget would be able to address the challenges being spelt out by the Government itself while at the same time steering the economy away from the present weaknesses.

The significance and novelty of the budget lies in the two proposals � one for starting a National mission for reducing the male-female literacy gap, and another for introduction of a National food security legislation later.

As regards immediate interventions, the budget has enhanced the allocation for infrastructures.

This, however, is not for new schemes, but for the existing programmes.

The enhancements further are mainly for inclusiveness objectives than for accelerating growth.

The other is the enhancement of allocation for the flagship scheme for guarantee of rural employment.

As regards the privatisation of banks as needed by logic of reforms but objected by the employees of the nationalised banks, the matter has been put on hold in clear terms.

Here the Finance Minister brings out the chamcha culture of the party in power when he eulogises the far-sightedness of Indira Gandhi rather than straightway putting forth the logic of continuing with the present regime.

The other proposals in the budget reflect orientation towards meeting the needs of those who can afford.

The schemes for extension of loans to farmers, and other schemes are but continuation and widening the coverage of the schemes already in place.

The orientation of the budget towards more statist approach to development is going to raise the fiscal deficit to more than 6 per cent of the GDP, which definitely would have unwanted consequences for the economy.

First, the orientation of the budget does not have any production enhancing component, either of the agriculture or the industry sector.

This is particularly unfortunate for the prices of items consumed by the common people have already shown signs of high rise.

Secondly, the new expenses would definitely expand the demand in the economy.

Assuming that the Government expenses grow at the estimated 34 per cent rise in budget allocations only and the economy grows at the most optimistic but unlikely rate of 9 per cent, there still leaves huge demand gap.

This is particularly so because most of the allocations would get reflected into demand for primary goods.

Given the current scenario, the rate of price rise would hit a double digit figure before the end of the current fiscal.

The tax proposals in the budget does not show any sign of serious application of mind.

Sometimes the proposals look rather like satisfying the richer sections of the population.

Besides, the Govt now talks of "re-energising" itself rather than governance reforms.

Overall : Overall it is the most uninspiring budget in recent years.

Such a budget could have been imaginable on the eve of elections, but definitely not after elections and a firm Govt has been formed at the Centre.

Instead, the Govt has just wished to distribute doles to the general population for returning the party to power once again.

But in the process, the long term needs and immediate calls of the economy have been sacrificed.

It is now a return to the statist approach to development which had only put India behind others in the growth competition, widened and deepened the corruption base, slowed down technological innovation, empowered the babudom, and what not.

Well India is now moving towards back to square one.

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