Since the 1950s, rapid GDP growth along with social justice

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Since the 1950s, rapid GDP growth along with social justice, rural employment schemes, welfare economics, hikes in threshold limit for personal income tax, taxes on cigarettes, and proposals to broaden the tax net were the underlying themes of almost all the election Budgets.

The shackled Indian elephant is running. The Asian tigers have given way to the dragon. Globally, there’s an ongoing tussle between the ‘Lexus’ factor and the ‘Olive Green’ one. The world has changed. But there are things that seem to go on and on. The Indian Budget, especially in the year before an impending general election, is one of them. It’s surprising, even funny, how the Budget speeches of the country’s Finance Ministers through the nearly six decades of Independence have read almost the same in such crucial years. The FMs seem to just borrow the ‘right’ phrases from their predecessors.

The rhetoric is the same. So are the sound bytes. The logic is straightforward. The proposals are only a bit different, and change with the context of the era. At the end of the day, the various Finance Ministers – ranging from Morarji Desai, Indira Gandhi, S.B. Chavan, Manmohan Singh, and Jaswant Singh to P. Chidambaram have talked in the same ‘Budget’ language, used the same expressions, and openly wooed the country’s voters. The Election Budgets, dear friends, have always been the same.

Invariably, the speeches begin with how India has truly – and finally – embarked on the growth path. They talk about how India is on the verge of going beyond the past years of slow and ‘edgy’ growth. Listen to Desai who, in 1961, said: “…the last 10 years have been a period of striking development in almost all sectors of the economy. Large investments have been made in agriculture, irrigation and power, major as well as medium and small industries, transport and social services. We are perhaps too near these events to be able to assess their full impact or significance.”

Chavan continued with the same economic theme in 1989, 28 years later. “I am happy to inform the House that the latest estimates of economic performance in the drought year of 1987-88 indicate that, despite the drought, GDP grew by 3.6 per cent. This commendable performance in a year of drought has been followed by vigorous growth in the current year and we expect the GDP to grow by 9 per cent or more in real terms. For 4 years in succession, manufacturing output has grown by over 8 per cent per year which is a clear vindication of the industrial policy of the Government.” Obviously, the architect of economic reforms, Manmohan Singh, couldn’t resist talking about how he has cut through the ‘shackled’ growth, and put India on to a path where she could soon become an economic superpower. In 1995, before the 1996 elections, he announced in his Budget speech that “the growth of our economy had fallen to less than one per cent in 1991-92. We brought the economy back to a growth of 4.3 per cent per year in the two years thereafter, and growth has accelerated further to 5.3 per cent in 1994-95. Few countries can claim as quick and smooth a recovery from as deep an economic crisis.” After all, he was the ‘original’ reformer.

This year too, Chidambaram continued with the same theme. And let me not bore you with extracts from his speech. I am sure all of you heard and saw it. So, what do these Finance Ministers do then in a year that has seen unparalled economic growth? What is their focus to provide further impetus to it? Do they go ahead and announce policies that will unleash the private sector and entrepreneurial activities? Sorry, they don’t. After all, it’s their last Budget before the forthcoming general elections.

So, they contend that economic growth is fine, but it has to definitely go hand-in-hand with development and social justice. For example, Desai said that “it would, however, not be wise to rest on our oars and take the present improvement for granted. A greater intensification of our efforts will be necessary in order to achieve that target. Development involves sacrifice and the essence of democratic planning is that the sacrifice should be evenly spread and should be forthcoming readily and voluntarily. I invite every citizen to participate in this sacrifice and to save more in order to invest more in the Small Savings Schemes.”

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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