The big mandate that the Indian public had given to Dr.Manmohan Singh led Government stands seriously undermined with a single strokeof Budget Proposals announced on the floor of Indian Parliament on 6thJuly. The disappointment was so spontaneous that hardly had Finance Ministerfinished reading his Budget speech that the Opposition Members of Parliamentgot up to protest against the Budget Proposal. So immediate and strong wastheir reaction that a history was created when the House had to be adjourned immediatelyafter the presentation of the Budget for the next day. The loss of goodwillgenerated by the mandate seemed to evaporate in thin air.


To my mind, the Finance Minister, despite of decades ofparliamentary experience, failed to read the minds of the people and wasprobably guided by the political considerations that far outweighed the seriouseconomic concern that the global economic recession with major economies in astate of acknowledged depression should have brought about. He has preferred tolet go the fiscal deficit shoot up to 6.8% of GDP for what was essentially asocial Budget.


Nearer home, I would like to point out that the Indianapparel exporters feel seriously let down. They had built up high hopes, whichwere not unjustified at all; in fact, the long list of expectations and appealsmade by the apparel exporters was indeed the minimum most what should have beendone by the Government. This was more so when the trade bodies like ApparelExport Promotion Council and Garment Exporters Association have repeatedly beenasking for. A recent presentation made by AEPC to the Finance Minister himself,was eloquent and substantive enough to make any Finance Minister sit up andthink that here is a case, which calls for urgent support from the Government.


In fact, the detailed presentation listed out, with validjustification, a number of recommendations, which included realistic dutydrawback rates, re-introduction of benefit of Section 80 HHC of IT Act,exemption of Fringe Benefit Tax, income tax relief on R&D, Market LinkedFocus Product Scheme, rationalization of Excise duty, availability of exportcredit, interest-free loans for investment in machinery with zero duty importof capital goods, exemption from State levies, moratorium of loans for twoyears, prime lending rate for T&C industry, exemption of Customs duty onindustrial garment machinery, allocation of enhancement of MDA etc.


Now, each of the concessions that the apparel exporters havebeen asking for were extremely well-based. Most of the concessions that theyare asking for are what their counterparts in the competing economies arealready getting, without sometime even asking for. Take the case of ourneighbours like Pakistan, where garment exporters are entitled to 6% towards R&Dsubsidy. China has been stepping up their fiscal support to the garmentexports, very frequently, on the first available indication of their garmentexports showing decline; notwithstanding that China continues to be the largestgarment exporter in the world.


Compare these with what our apparel exporters have beenendowed with in the Budget proposals. What has been bestowed by the Governmentto the 'garment export sector' is much more limited that what has been doledout to the industry and trade otherwise. For example, in case the garmentexporters would get the benefit of discontinuation of Fringe Benefit Tax, it isnot because the Government intended it for the garment export sector or theexport sector.


One benefit which should be acknowledged is the increasedprovision of Rs.124 crore for Market Development Assistance (MDA). While theGovernment, right when Kamal Nath was the Commerce Minister, has beencommitting time and again that the Government would not like the taxes to beexported, which had given hope that Service Tax would be withdrawn. Year afteryear, the exporters have been expecting repeal of Service tax. The Budgetproposal honours that commitment only by waiving of the Service tax fortransport of goods through road and Commission paid to foreign agents. Allother legitimate demands of garment exporters' stand ignored.

 

The point that should have been given the deserving consideration by the Government was: how to enable our exporters to compete in the world market by providing them with level playing field without which nothing can be helpful to our exporters, who are not only earning foreign exchange, but also creating and maintain a lot of employment and contributing to GDP.


I fail to understand as to how the Government led by an as enlightened and acknowledged economist like Dr. Manmohan Singh failed to promote the sectors, which bring in prosperity, employment and foreign exchange, besides making greater contribution to GDP? Nothing can explain this except that politics has overtaken economics.


This has led to frustration bordering depression among garment exporters and certainly Pranab Mukherji has not proved himself to be a Finance Minister, worthy of taking care of economy at the time of world economic crisis, which he himself acknowledged a number of times in the course of his Budget speech.


The views presented are author's personal views. Here 'I' refers to him.