Dr.K.K.Ammannaya, Udupi

From: Dr. K. K. Ammannaya kkammannaya@gmail.com
To: mailto:tobudgettwentyten@gmail.com
Date: Wed, Feb 10, 2010 at 7:37 AM
Subject: Dream Budget

The budget for 2010-2011 Tobe presented by union Finance Minister towards the end this month must be so crafted as to make it an effective instrument for recovery and growth across all vital sectors without any inflationary content .It should act as a spur for broad based recovery and growth with simultaneous measures aimed at combating inflation.The budget must seek to spur productive investment in all vital sectors particularly in agriculture ,industry and SME sectors and promote spending.A sound balancing between twin considerations of accelerating growth and fiscal consolidation will be crucial from the point of view of achieving growth sans inflation.From this angle two major initiatives required in the budget are-1.Organised and well-co-ordinated effort at fiscal consolidation.2.Growth spurring investments on promotion and expansion of infrastructural facilities,agriculture,SME sectors with retention and continuation of existing stimulus measures until growth momentum gets firmed up.For achieving fiscal consolidation serious attempt must be made to reduce fiscal deficit and FRBMtargets must be adhered to at any cost.Cost cutting across all ministries and departments both in union government and states and efficiency promotion at all levels in the government will be key factors.Governance must be tightened at all levels and there must be accountability for results and it must be ensured that soundings produce commensurate physical results and leakages ,misuse of funds etc must be sternly dealt with.Employment generating programmes like Mahatma Gandhi national rural employment guarantee programme must be implemented effectively to ensure that the the programme becomes really inclusive and there must not be any misuse of money.It is better if an independent all India authority is set up for supervision,and monitoring implementation of this scheme with state level authorities under it.The budget must give utmost primacy to agriculture and it must be our goal to enhance the share of agriculture in GDP to 25 per cent by 2015-16.There must be stress on expansion of irrigation facilities in all areas now dependant on monsoon alone and allocation for this must be stepped up.Agricultural reform,innovations, and agricultural extension programmes must be given attention.Financial inclusion of farmers must not stand confined to mere opening of no-frills accounts without further follow up.Financial inclusion must be made rewarding to the farmers and also beneficial to the banks.Rural non-farm activities must be encouraged and revived with full refinance support for lendings to that sector by NABARD.Rolling back of stimulus measures must not be done in haste as the same will derail the growth process .Withdrawal of stimulus must be done a little later i.e after growth momentum gets really firmed up.The timing must be decided upon very carefully Stimulus can be rolled back only after growth process gets fully broad based and self-sustaining.Indian corporate sector makes great contribution to the growth of the economy.Hence it is necessary to encourage the corporate sector by reducing corporate tax marginally,say by 2.5 percent.Promotion of public ownership of all government enterprises is a vital requirement for participative growth In public sector company IPOs retail investors with annual income of less than Rs 5 lakhs must be given discount of at least 15 percent.This will encourage broad based participation by retail investors The Share transaction tax introduced few years back must be withdrawn to facilitate broad based participation by middle class people in stock market. Self-sustaining growth requires full employment.Hence all out efforts must be made to create and expand employment opportunities.If possible national urban employment guarantee programme also be launched this time.Education,health care and skilss training are vital from the point of view of promoting employment and productivity.The budget must increase allocations to these social sectors.The ratio of doctors per lakh population must increase.Quality education for all,health care for all and skills training for all must be our avowed objective.Human development must be an area of focus in the budget as our ranking in HDI is none-too-satisfactory.. Senior citizens and elderly are a neglected lot in India.The budget must focus on health care for them and provide facilities for quality medical treatment free of cost if they are with annual income of less than Rs 3lakhs.The definition of senior citizen must be modified to cover all those above 58 years of age subject to the condition that they must be retired people.This is necessary because in Anny states age of retirement is 58.All those who retire at 58 must be treated as senior citizens in the interests of equity and justice.As interest rates are declining it is necessary to launch a special deposit scheme for senior citizens in post offices at 10.5 percent interst.

Dr.K.K.Ammannaya
Ganga
V.P.Nagar
4th main
Udupi-576102

Note.The author is a senior economist and ex-chairman of a regional rural bank.