Speech by Shri. Rajeev Chandrasekhar, MP during the discussion of

General Budget 2008-2009

in Rajya Sabha on 14th March 2008

Sir:
Thank you for the opportunity to speak on the budget 2008-2009. It’s the first time I am speaking on the National budget and I am grateful for the opportunity.
Sir, this budget is an important one – because it’s an end of term of budget and it’s also a transition budget to the next government.
Sir, I support this governments and previous governments strategy to use growth as the primary way to ensure the pressing problems of poverty and despair are addressed and eradicated in the shortest possible time.  I support this model of enterpreunerial led growth and efficiency in our economy. This is at the heart of the how and the why we have had growth for the last several years across governments – This is the growth thats caused this windfall of government revenues – allowing more spending power by the government.
The growth in the last five years have been on the back of significant increased investments, higher infrastructure investment to GDP ratio, higher consumer spending  and a robust consumption economy, robust services sectors , revived manufacturing and manufacturing exports growth  – This growth is showing signs of being self accelerating in the words of our RBI governor. This is on the plus side. On the minus side we had a weak and increasingly vulnerable agricultural sector and inflation driven by surging prices in primary products and commodities and the fact is that unlike in the past we are also less insulated from global shocks and global movements of markets and economies.
Much has been spoken and written about the budget before this discussion and during it . So I will focus on just a few areas. 
This budget read along with the 11th plan tells us one thing – The government and all of us have realized that growth benefits need to trickle down further and that this needs to be done faster.  This budget and the 11th plan is creating an economic architecture that seeks to restructure policies to achieve a new vision of a faster, more broad based and inclusive growth. Sir, I believe as do many of my colleagues inside this house and outside - in this broad objective for us as a nation. I believe that true inclusive growth is essential for us to bring out of misery and despair the millions of Indians who are seeing this economic miracle and growth story of India pass them by.
Therefore I support the central theme of this budget – that of a budget for the poor. I support this budget in many things it is attempting to do – the never seen before investments in education capacity building, the trigger to the consumption economy through personal tax exemptions and the significantly increased investments and spending in Rural infrastructure, Irrigations, Skill development, Wild life protection and Climate change and most importantly the attempt to monitor spending outcomes through the Central Plan scheme monitoring scheme (CPSMS).
I also agree wholeheartedly with the focus on inflation control because to quote Dr YV Reddy Governor of RBI “Fighting inflation was a bigger priority than growth because spiralling prices hammered the poor immediately whilst the benefits of economic expansion took time to trickle down to the poor”
That brings me to the issues that care concern with this budget.
Sir, Firstly for us to achieve this goal of inclusive growth , we need to accept and understand that we need a medium term plan and a plan that’s aimed at ensuring sustainable inclusive growth and not fits and starts . I say this because I see nothing in this budget or speech that points to any part of this being part of a longer term sustainable strategy. One response could be that the budget isn’t supposed to do that and the 11th plan document should do this. Sir, If this is the case, then the house should have a broader and longer discussion around the 11th plan objectives and strategies on how to make inclusive growth sustainable.  I would request to allow such a discussion at the earliest sir. We must make inclusive growth a national obsession and not political football for any one political party. Let the politics be about innovation and ideas how to get us there and not about the objective.
Sir, As we all agree the poor and impoverished don’t remain poor and impoverished through generations because they want to or that they don’t try hard enough to break out of their vicious cycle of despair and hopelessness. Its just that they don’t have the institutional support that gives them a fair chance to use their skills, hard work and intelligence to change their lives. I believe sir, that our approach to this inclusive growth objective should be one of providing these millions of Indians a brand new fully integrated infrastructure of opportunity ( IOO). This framework and infrastructure must be integrated and must contain health, education, skill development, credit and finance, security solutions. This will require some out of the box thinking by the government – something that the governments aren’t very good at usually, but I strongly urge the Finance Minister and the government to examine the creation of a long term and sustainable model that will address the core issue of empowering and giving opportunity to the millions who don’t have it today.
Sir, Secondly is an issue that “I believe is at the core of any changed approach to bring about inclusive growth”. Inclusive growth outcomes cannot be met in a fast track approach unless we restructure the way governments spends its money.  I never tire of reminding ourselves of Rajiv Gandhi’s quote of only 15 paise of every rupee from government programs reaching the intended people. The house is already aware of the CAG report on the performance of NREGS in some districts. Sir, if we are to be serious about addressing these problems of poverty and despair we have to fix this problem. With the growing economy and the robust revenues as the wind behind the sail of the government, the budget is making very significant allocations for spending for the poor and disadvantaged. But the same old leaky and inefficient system is being used to deliver these vastly increased spends. That’s a bad strategy and will no doubt make many middlemen rich but will severely impair the urgency of our objectives. The Budget does talk about the setting up of a Central Plan Schemes Monitoring scheme (CPSMS) along with a comprehensive Decision support system. This is the best news I have heard in a long time about our efforts to reform and improve government program efficiency. But I would strongly suggest a deeper restructuring of our programs aimed at improving this 15 paise to 95 paise per rupee. Sir let’s make this money and spending really work and deliver real results for our people. I would urge the Finance Minister and government to do more.
Sir Finally, I come to the issue of the gathering storm clouds of a slowdown. It was clear much before the budget that certain parts of our economy were already showing signs of slowing down. Manufacturing sector showed a slowdown from of 25% year on year and steeper if looked at month of Dec. The Electricity sector showed a more than 50% slowdown compared to previous years December. The weak dollar is also causing tremendous havoc and pain in the manufacturing export sector including many SMEs. We are all very aware that many lakhs of people are employed by this sector. We are no longer as insulated from the global economy swings as we once were. Today our Economy has a higher component of volatile portfolio flows on capital account and the RBI has admitted that there are severe policy challenges in managing the capital flows.
Reports point to this prediction of a slowdown becoming a slow and sure reality. I am sure that the Finance Minister is aware of this and he has said that he will keep an eye on this and take necessary action to ensure that this sector doesn’t go sick. I am only afraid that given the governments general track record of responsiveness – any response will be too late to prevent a irreversible slowdown and all its attendant problems.
Sir, before ending let me congratulate the two Finance Minister on the two things that have to do with the future – the institutional climate change program and the investment in Wild life protection. People who care about wildlife and environment are not wildlife fundamentalists as was regrettably characterized by a senior colleague in this house and I applaud fully your step in modernizing and arming our ill-equipped forest reserve forces.
 Sir, in ending this year is a transition year and a critical year – its important we don’t fall off the growth track and get derailed. I remember very well what happened the last time our Honourable Prime Minister presided over an pre-election budget in the mid 90s. Increased public spending in the face of an economic slowdown caused us to spiral into a 3 year recession and it took some time for us to get out of that one.  This budget is amongst all other previous ones of this government - is the most risky to pull off. This budget would have worked like a charm if this was a year or even 2 years ago. “The weakening global economic cues and signs of our domestic slowdown in some areas – reinforces the view that this could turn out to be a high risk budget” with consequences on the current growth strategy and slope.
I know that the Finance Minister is a lucky Finance Minister – I think he will have to command all the luck and best wishes he has at his command for this year. I wish him all the best.

Thank you.