The Union Budget 2010-11 comes in  a context when entire country is reeling under the impact of a massive price rise and has witnessed a negative growth rate in the agricutlure sector. Urgent steps should have been taken to curb price rise and provide relief to the common people. The budget presented by the government completely betrays these concerns.

There was widespread expectation that the budget would take some steps in controlling the current runaway inflation in the prices of all essential commodities particularly food articles.  The measures announced in the budget, however, will result in the complete opposite .  The decision to impose a one rupee Central Excise Duty on petrol and diesel and the re-imposition of a 5 per cent customs duty on import of crude oil and a 7.5 percent on petrol and diesel will substantially hike fuel prices.  Additionally, the reduction in food subsidy by over Rs. 400 crore and fertilizer subsidy by a massive Rs. 3000 crore will contribute further to the pressure on prices.  Put together these measures will have a cascading effect on the inflationary situation and impose further burdens on the people.

The people were looking for some relief from the excesses of burden imposed by  this price rise.  Much of this inflation is due to speculative trading that is taking place in the commodity exchanges.  The value of monthly trading is reportedly to the tune of some lakhs of crores.  A ban on future’s/forward trading in all essential commodities would, to a large extent, have contained speculation that is pushing up the prices.  Last year major trading corporates have reported massive profits ranging from 150 to 300 per cent. The Finance Minister is fond of quoting  Kautilya  and his Arthashasra. The Finance Minister, however has overlooked Kautilya’s prescription to heavily tax ‘ gambling houses’ or speculation !

The Economic Survey reports that as of 10th January, 2010 as against the buffer norm of 200 lakh tons of foodgrains the government had in its godowns 474.45 lakh tons of rice and wheat.  Instead of holding such a huge surplus above the norm and incurring high carrying costs the government should have released the excess amount to the States for distribution through public distribution system. On the contrary, last year the UPA 2 government, mysteriously reduced the release of foodgrains to states for the Above the Poverty Line population by a massive 17 lakhs tonnes. This release of this excessive buffer stocks now  would have considerably eased the pressure on prices.

The tax proposals contained in the budget have provided a relief to sections of tax payers with the government earning Rs 26000 crores less from direct taxes.  This however, is more made up through an additional revenue of Rs  43500 crores through indirect taxes and Rs 3000 crores through service taxes.  Now, indirect taxes are inevitably passed on to the consumer in the form of higher prices.  This will add to higher levels of inflation in the days to come.  So far from meeting of the aspirations of the people on the price front the Finance Minister and the UPA  2 too government have imposed greater burdens

The budget also shows the insensitive attitude of the government towards addressing the problems in the education sector. The education sector in India is marked by a dearth of funds. The promised spending of  6% of GDP has been conviniently ignored. There is only a small increase of Rs 5000 crores for primary education sector in the country. This is way below the required amont to fulfill the promises made in the Right to Education Act. MHRD’s own estimates have put the required spending for Right to Education in the Eleventh Plan at Rs 1.73 lakh crores. This gives an annual requirement of Rs 34,600 crores per year as oposed to the total Rs 22000 crores announced in the budget. As far as higher education is concerned the Revised Estimates for 2009-10 suggest that the allocation to higher education sector was only Rs 14389 crores in place of the original allocation of Rs 15429 crores made in the 2009-10 budget. This shows the deceitful role of the government in spending more money on the higher education sector. Also this year there has been a meagre increase of only Rs 1461 crores compared to the 2009-10 budget. This exposes the empty rhetoric in the tall claims being made by the HRD minister to expand the number of universities and other higher educational institutions in the country. To put it simply this budget has completely failed the expectations and needs of the student community in the country.


The UPA is pursuing the path of financial deregularization when everyone else in the world is doing the opposite. The budget also talks about opening up retail trade which can have disasterous implications for livlihoods of millions of people. It is also shocking that food subsidy has been reduced by over Rs. 400 crore despite the commitment to enact a food security legislation. Fertiliser subsidy has also been cut by a whopping Rs. 3000 crore from what was spent last year. These moves to reduce subsidies in the name of targetting come at a time when inflation is galloping and agricultural output growth has become negative. The government’s antipathy towards the rural areas can also be seen in stganation in Central Plan outlays for agriculture, irrigation and rural development in real terms.

Apart from its pro-rich bias, this budget also seeks to undermine the federal structure of our country, where states have not been allocated the rightful 50% share in sharable central taxes. There is also a squeeze in central assistance in real terms.

The proposed cess of Rs. 50 per tonne on coal will not only increase the price of coal but also the price of electricity which is another major input for agriculture. With increase in price of agriculture inputs like fertilizer, diesel and fuel, the food security of the country is being put in jeopardy while the budget talks about a food security bill.

Similar tokenism as well as crude joke is presented in budget through an allocation of only Rs. 1000 crore for social security of 47 crore unorganised sector workers. The budget sppech by the finance minister did not miss to mention about the restrictive conditionality of “below-poverty-line” in this respect which itself excludes 90 per cent of the unorganized sector workers from the purview of such social security benefit. Similarly budget totally ignores the plight of 1.4 million anganwadi workers and need for universalisation of the ICDS scheme by way of making meager increase of Rs 538 crore in allocation compared to revised estimate of last year.

The declaration in the budget that the government will mobilize Rs. 25,000 crore through disinvestment of PSUs during the current year is totally illogical as the PSUs had a reserve surplus of Rs. 5,35,840 crore on 31.03.2009. As a matter of fact during the year 2008-09 the reserve and surplus has increased by more than Rs. 50,000 crore a part of which could have been utilized for new investment and job creation.

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