When the President addresses Parliament at the beginning of the Budget session, his speech is generally supposed to serve as a rough draft of the government's agenda for the coming year. It is true that this year, Pranab Mukherjee's speech dwelt more on what the government claims to have achieved. However, the listing also reveals the Centre's policy focus and priorities. Certainly, these appear to have moved in a different direction from what was signalled by the government in its initial months. As is expected from the Budget, the larger agenda's focus is mainly rural and agricultural. In the President's speech, fertiliser sector initiatives, various agricultural schemes, the Mahatma Gandhi National Rural Employment Guarantee Scheme and infrastructure building were given pride of place. The non-farm agenda - jobs creation, a revival of growth, fiscal consolidation, bringing inflation under control and so on - were all part of the speech, but they were not its central focus.
While a rural focus following two successive poor monsoons is understandable, the various major concerns about the larger economy, even if mentioned, unfortunately did not seem to receive adequate emphasis. The problem of reviving investment remains unsolved; but no major new initiative or push seems on the horizon. Yes, the fiscal deficit may be declining; but the stress on fiscal consolidation is underestimated, thanks to the demands from the recommendations of the Seventh Central Pay Commission. Retail inflation has certainly stayed below six per cent; but food prices continue to put upward pressure on the consumer price index. And the recent series of agitations for reservations in government employment are an unmissable sign that too few jobs are being created. The benefits from the oil sector in the wake of the declining global price of crude oil - as also the challenges that flow from it - have been ignored.
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Several other pressing issues and how the government would respond to them in the current session did not find a mention. Leading these are the crucial proposed laws that would be potentially transformative for the economy - the goods and services tax and the bankruptcy code. Given the impact on investment of an adversarial tax regime as seen in some high-profile cases of tax disputes, there did not seem to be an adequate appreciation of the need for reform of tax administration, though the President did state that the government had put in place a simplified, progressive and non-adversarial tax regime. In addition, while the government has hitherto focused on the urgent need to scale up public investment in infrastructure, this past focus was not fully reflected in the President's agenda for the government this year. And finally, the deepening crisis in the banking sector - the rising levels of non-performing assets - did not find a mention as the priority it should be.
The President's speech usually serves as an assessment of the state of the nation. The government's decision to recognise the importance of the collapse in rural demand, the growth of rural distress, the unreformed state of the farm and irrigation sectors, and the stagnation in rural wages is praiseworthy. It demonstrates how democratic government must respond swiftly to the events that impact citizens. But reviving growth and investment, and undertaking structural reform, are crucial for a sustainable increase in living standards in both rural and urban areas. Hopefully, the impression that less attention will be given to these issues will turn out to be mistaken.
