The fiscal deficit has become quite unsustainable. This budget too maintains a high level of deficit. The Finance Minister has made only a half hearted attempt to address the issue of fiscal deficit. One welcome move for raising revenues has been to impose higher tax rates on personal and corporate taxes. I would have been happier if the income bracket paying upto 20 percent personal income tax had been spared and a slab of 40 per cent tax had been introduced at an income level of say 10 lakhs of rupees a year. The Indian rich have shown that they will evade taxes, whatever be the rule. So the attempt that has been made is far from satisfactory. Nothing has been done to deal with tax evaders. Budget figures show that the interest payments of internal debt will rise by an amount of 10,000 crores of rupees in the coming year compared to the last year. This is an alarming figure. The government has used internal debt as a means to curb deficit.But if the fiscal deficit cannot be reduced, the states would also fail to get the adequate share from the Centre as a part of planned assistance to the states. The centre would fail in such cases due to increasing trend of the fiscal deficit.

The budget has not addressed at all the issue of bringing down the balance of trade or current account deficit. Due to our increased earning from two sources, the current account deficit has not increased further. But the gap has been tried to be met through debt creating devices like Resurgent India Bonds. Many levers are being offered to attract foreign investment. The government has also brought in a series of sops for stimulating the stock market. However the stock market is still a marginal supplier of funds to Indian enterprises, which are heavily dependant on bank borrowings. These are not enough to put new life into the stock market, which may be temporarily brought to life but will come down again.

The budget also did not care about the fundamental social problems of the economy. It is a welcome move that most of the proposed schemes will be implemented through the Panchyats. But where the Panchyats are not properly run and they are representatives of rich farmers—zamindars and jotdars, this will not benefit the rural people.In such cases, this will benefit the patrons of Ranavir Sena. The importance of land reforms in reaching any benefit to the rural population has been stressed long ago. But no Finance Minister mentioned anything regarding this, neither the present one.

The present budget has also inflationary implications. If inflation takes place with growth of the economy, there is no harm. I do not object to inflation if the people of the economy are protected from inflation. But there is no such indication now. The current rate of inflation in the country is largely caused by a rise in prices of food articles. The inflation was not higher than 6.8 per cent in the current fiscal year due to a fall in POLprices.