Delhi captured, UPA looks to states

Goodies for states going to Assembly polls, minorities and, of course, the ‘aam aadmi’.

With only months to go for Assembly elections in the important state of Maharashtra, Finance Minister Pranab Mukherjee presented a slew of measures for voters there. Farmers who had more than two hectares of land had been, under the Agriculture Debt Waiver and Debt Relief Scheme, 2008, given time till June 30, 2009, to pay 75 per cent of their dues. This date has now been extended to December 31.

Conscious that many farmers there were not covered by this scheme as they had taken loans from private moneylenders, the Budget promises the constitution of a task force to look at this issue in detail. Budgetary allocations for the Brihan (Greater) Mumbai Storm Water Drainage Project now gets an additional Rs 300 crore — from Rs 200 crore in the Interim Budget (BE) to Rs 500 crore in this Budget — to complete the project.

For the minorities, who played a big role in getting the Congress-led United Progressive Alliance (UPA) back in government for a second term, the plan outlay has been increased from Rs 1,000 crore in last year’s Budget Estimate to Rs 1,740 crore in 2009-10, a rise of 74 per cent.

Most of the allocations are for education of minorities. In addition, Rs 25 crore each has been allocated for campuses of the Aligarh Muslim University at Murshidabad ,West Bengal, and Malappuram, Kerala. Both states are to have Assembly elections in 2011.

In fact, Mukherjee made a budgetary provision for the first time ever, for persons of Indian origin abroad — the taxpayer will have to contribute Rs 500 crore for the rehabilitation of Tamils in North and East Sri Lanka, internally displaced because of operations by the Sri Lankan military.

Thus, with one political stroke, Mukherjee sought to silence voices in Tamil Nadu which have been criticising India for being a passive bystander in the Lankan war. The Assembly elections there are also due in 2011.

While one single political push is missing from the budget, there are a host of such small steps that reveal the footwork of a political mind.

Political donations have been exempt from tax to the extent of 100 per cent. Currently, political donations by Indian companies to political parties are permitted under Section 293A of the Companies Act, 1956.

There are three conditions. The annual donation must (i) not exceed 5 per cent of average net profits during the preceding three years (ii) be approved by a resolution of the board of the company, and (iii) be disclosed in the profit and loss account.

The Confederation of Indian Industry had suggested such donations be made tax-deductible under Section 80G of the Income Tax Act, 1961, and the decision of the company's board be approved by its shareholders. Now that donations are fully tax exempt, the cash registers of political parties are likely to start ringing, as these contributions will now be treated on a par with other charitable donations.

There are other ‘aam aadmi’ schemes to be implemented in a secular way, distributed over the middle class and the poor, the core constituency of the Congress.

The Budget promises work on a national food security law, increase in Bharat Nirman allocations by 45 per cent,

Rs 100 a day wages for beneficiaries of the National Rural Employment Guarantee Act (NREGA) and a national mission on female literacy, especially for disadvantaged groups.