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Indian Libertarians

The Drama of Union Budget

admin Saturday March 2, 2013

The 82nd Union Budget of India for the fiscal year of 2013/2014 announcement was made a couple of days back. The union budget is one of the most important event which almost every citizen eagerly awaits. Soon after the budget announcement we find all kinds of discussions over it. Normally the Minister of Finance will claim that they did the best to balance the budget in keeping the poor in mind and above all in the best interest of the nation. The opposition party will religiously oppose this view of the Minister. The media will rope in a bunch of intellectual experts especially those with many awards and degrees from prestigious institutions of economics along with some public personalities with zero understanding of economics to tell the average person what was the budgetary exercise all about. This drama lasts for a week in which every person is a fiscal expert. So what is this union budget all about and how does it serve us?

Simply put the Union budget is all about how much the government is expecting to rob us of our wealth, how much they will keep in their pocket and how much are they going to waste. Questioning the results of the previous budgets breaks the myth of any constructive purpose the government budget serves or if budget planning ever been effective to meet the purpose which it promised to meet. Did the government not project to cut the fiscal deficit in the last budget? The account deficit was at 3.6 per cent of GDP for 2011-12 and now it stands at 4.7 per cent of GDP. Exactly the opposite of what the budget told us it would do. If we take a look into the amount of money the government claims to have spent on welfare of the poor and do a reality check, one can only ask why is poverty still there? This is not just about the Government of India but every government across the globe. Each one of them has failed to carry out what they promise in their budgets. So what is this budgetary drama all about?

The budget is simply the governments coercive decision to show who are the net tax payers and who are going to reap the benefits of the collected taxes. The curiosity and interest of the people lies with the fact how much of their wealth the government is going to steal and if the government has any provisions to ease their parasitic want of living at someone else expense. A large part of the tax extorted from people goes in as salaries and expenditure of government itself. The growing government spending is the major reason of rising taxes and prices which makes consumption goods dearer by the day. Another big chunk of cash these days goes off in the form of bail outs, subsidies and stimulus to crony friends of the government and their misadventures. Rest of the budget consists of giving relief in taxes on certain items of our daily expenditure whilst taxing other items of our daily expenditure. Every budget plan is simply an economic distortion brought about into an ordered economy which will eventually order itself naturally. Effects of such distortions leaves us with no other choice but to live with it. Hence it should be asked, is this the reason government system was formed in the first place? The role of government was supposed to offer welfare for poor, offer security to our lives from criminals, defend us from foreign aggression, maintain law and order, resolve dispute by providing resolution and justice and so-called other public goods. None of these tasks the governments anywhere in the world has been able to meet.

Let's try to understand the present budget and try to understand what does it actually say. The government plans to spend a total budget expenditure of Rs 16.65 trillion ($309 billion). This is a huge sum as most development comes from the pockets of us "the private individuals". This is a minor contribution provided to us by the government which forces us to pay a lot more for it. In a way government is an expensive evil imposed on us. The government of India like every other governments across the world is dealing with a problem called hyperinflation and stagnation. This problem is created by government alone. The steep price of such problems and mistakes committed by the governments is thrust up on us, the honest hard-working laborious man. Next the budget talks about the government trying to cut off its expenditure and adjust its borrowing. In other words it wants to attempt and control inflation. It also talks about infusing money into the state-owned banks (PSU) which means that the banking sector is shaky with lots of bad debts. These bad debts are created by the loans it had lent and now unable to recover. It is also trying to cut down on its defense spending. Military is another useless government expenditure. A huge military expenditure never solves problem nor does it deters any nation which plans to engage in war. In fact it triggers an arms race, creates mistrust and tensions between the neighbors. The cost of such foreign policy again is extorted from us. The scares resources of our planet used to manufacture weapons are simply a waste. These valuable resources should prove more fruitful to humanity if it were to be used for productive purposes. Building Bunkers and forming a militia is a better and a cheaper form of defense than having huge stock piles of weapons. Employing many of youth into armed forces who stay non productive is of no useful benefit to humanity. The other part of the budget talks of plans to sell out the state owned assets (property which it seized and stole from us in the past and calls it public property) to crony corporate partners who funds their elections and spends a lot on lobbying. These state own property is presented as a liability and sold off for petty sum via staged auctions in which only the crony friends of the government participates. The budget also plans to cut down on certain subsidies. This again is trying to control inflation by cutting off some part of the government expenditure. The only reason the government is reluctant to raise taxes and not cut down on borrowing or inflating the economy is due to political reasons. Any government which increases taxes will invite a direct retaliation from the masses and therefore lose their chances of getting re-elected.

It is clear from history that even after 82 budgets and spending crores and crores of rupees under the pretext of welfare the government has not been able to solve any of our problems. We still have infrastructural issues, sanitation issues, high poverty, energy and power crisis, increasing prices as well as dearness, healthcare issues, educational issues, internal conflicts, external conflicts, drinking water problems, agricultural problem, environmental problems and every other kind of problems which the government had promised to solve. Two brilliant minds Ludwig Von Mises and F. A. Hayek had already proved that government cannot calculate the economy, plan it or control it. All that government interference can do is destroy the economy. It is therefore essential for us to start questioning these concepts which costs us heavily and serves nothing. There should be a limit to spend time and money in our attempts to fix a problematic defunct system of government which has never worked nor will. Let's phase this system out.

 

Sources:

http://indiabudget.nic.in/ub2012-13/bh/bh1.pdf

http://articles.timesofindia.indiatimes.com/2013-02-28/union-budget/37351647_1_fiscal-deficit-petroleum-subsidy-tax-proposals