'Unfocused' budget leaves Indians fuming

By M.G. Srinath

NEW DELHI (DPA): Top bureaucrats of India's Finance Ministry were dumbstruck this week when they found that subsidized food grains for the poor will cost more next month than grains sold on the open market.

Rice sold on the current open market in New Delhi is being sold at 7 rupees per kilogram. The price for the poor for such rice is 4 rupees.

Thanks to the proposed fiscal 2000-2001 budget presented to parliament on Tuesday by Finance Minister Yashwant Sinha, the price of rice in subsidized shops will shoot up to 12 rupees per kilogram from April 1, when the new fiscal year begins.

There will also be corresponding price increases for other food grains, such as subsidized wheat and sugar.

If the officials are confused, Indians in general are outraged over Sinha's budget proposals.

Sinha has been proclaiming over the past few days that the "nation will have to bite the bullet" by making "sacrifices" to contain huge budgetary deficits over the years. The nation was mentally prepared for the harsh budget plan.

But the product unveiled on Wednesday was so tepid and unfocused that the prestigious Economic Times newspaper headlined its lead storys: "Did he (Sinha) bite the bullet, or did the bullet bite him?".

The newspaper, the Hindu, said "the feel-good factor" was missing in the "cluttered" budget.

There were no attempts to trim government flab, reduce the fiscal deficit -- now 5.1 percent of the gross domestic product -- or reduce the external debt which now stands at US$98.87 billion.

Except for sunrise industries like information technology and the telecommunications and entertainment industry, all other sectors were befuddled by the budget proposals.

The middle class, which comprises nearly 200-250 million of India's total population of nearly 1 billion people, will be hit hard by the price squeeze.

Some varieties of textile fabrics and garments will become more expensive as will air-conditioners and multi-utility vehicles. Food preparations and colas will be dearer along with automobiles, car tyres, tubes and cigarettes.

The middle class and the poor, who over the years have been the political core constituency of Prime Minister Atal Behari Vajpayee's Hindu Bharatiya Janata Party (BJP), are now hurt.

The class, particularly taxpayers, are angry over Sinha's move to deprive income tax assesses of food subsidies.

The BJP has now jettisoned its own swadeshi, or pro-Indian industry, platform and instead embraced the three-way slogan of "liberalization, privatization and globalization".

An increase of 28 percent, has been earmarked by Sinha for the defense forces, due to the "deteriorating security situation in the region."

India's current spending on defense is 2.3 percent of GDP. It is now set to go up to 2.8 percent next year on the premise that India's economy will grow at an annual rate of 6 percent.

There are already murmurs of protest from the allies of Vajpayee's coalition government over Sinha's move to hike the prices of chemical urea and subsidized grains and sugar.

Nearly 52 percent of Indians live below the poverty line, mainly in the rural areas. International financial groups have estimated most of the poor live on about one U.S. dollar a day.

This forces them to get a ration card to buy food grains at subsidized rates through the public distribution system (PDS) at government shops.

Sinha has said he will not withdraw the price increases on urea and PDS items. But in the past, he has done so under political pressure, with the newspapers labeling him as "roll- back Sinha".