Anequally important problem for the finance minister this year was to find resources for various governmental expenditures. This was difficult in a sagging economy, especially when tax collection in all areas of taxation had registered a decline during 1997-98 and there was no reason to expect a return to buoyancy unless fiscal and other measures were taken to faster resource mobilisation. Also, the declining growth rate of exports was curbing the inflow of resources from abroad. And to cap it all the announcements of possible sanctions by some countries, many of whom are major trading partners as well as aid-givers, was a disturbing factor for any resource raiser or stabiliser of the economy. Sinha seems to have ignored totally the possibility of the sanctions and did not mention these in his budget. The belief in government circles, perhaps, is that either the sanctions could be side-tracked by such settlements as joining the CTBT or that the sanctions could be negotiated away and put aside. But any prudentgovernment ought to have made some assumptions about the negative effect of the sanctions as such sanctions have no positive effect but only negative ones. No doubt, a fall in the rupee, which is already there, could enhance our exportability; but this would happen only if buyers buy our products. If, owing to sanctions, they reduce their purchases or fail to buy, exports could not be enhanced.

Many analysts have been underplaying the possible decline in aid resources from countries applying sanctions by saying that the percentage of aid to GDP is very small and by making the implausible assumption that if the sanctions do apply the country will rise like one man to face the sanctions! Such assertions are good only in a partisan debate and in the drawing rooms but a wise government must provide for the adverse possibility. The FM might have omitted the consideration of sanctions with a bent of mind that the causality as well as the solution to the negative impact of sanctions is not a matter of fiscalpolicy but of several other national policies and wider considerations.

Be that as it may, the FM has been able to raise adequate resources for all the expenditures in the budget in what is, perhaps, a clever set of moves. He has not raised the income tax rates nor, indeed, the corporate tax rates, in order not to disturb the business and the general sentiment in a recession-bitten economy. He has, in fact, raised the exemption limit from Rs 40,000 to Rs 50,000 a provide some solace to a section of the middle class. But, through manipulation of customs and excise duties, and some other measures, he has gathered enough resources to meet the bills and to avoid a large increase in the fiscal deficit.

Both to generate resources and to put the private sector of enterprise in an expansionist mode, Sinha has opened the insurance sector for cooperation by Indian private enterprise. In the future round of policies, who knows this sector may be opened to the foreign enterprises as well, but just now it was the turnof the domestic sector and, in line with the liberalisation policies pursued by the last three governments from 1991 onwards, this move seems well warranted.

Sinha has planned for a disinvestment of Rs 5,000 crore in the public sector undertakings. A disinvestment in the public sector turns out to be an investment for the private sector and this to would seem to be an aspect of liberalisation. The housing sector has also been opened up though this should have been done by the various governments twenty years ago and ten years ago. If the government sector, the public corporate sector, the private corporate sector, the cooperative sector and the NGO sector, all combine in enhancement of housing and the promotion of urban development, this country can move in to a different zone of essential utilities, better living, larger employment and much needed improvement in aesthetics.

The reduction in the capital gains tax and the virtual elimination of the gift tax, except for the recipients, are remarkablefeatures. While agricultural development remains a key aspect of India's economic growth and development, everyone knows that under our constitution the central government cannot do very much for capital formation and improve output performance by the agricultural economy. But there is enough in the budget to assist the agricultural and the rural sectors through the provision of larger resources to NABARD, substantial provision for Housing Development Finance Corporation (HDFC) and the provision of a million additional houses of which a good proportion will be allocated to the rural segment. That the defence expenditure has been enhanced by 14 per cent, a large proportion of which will go towards salaries, and the failure to reduce subsidies, remain two of the questionable items in the budget. What is in question is not the direction of the change provided but the adequacy of the measures in budgetary and financial terms. All in all, if one abstracts from the presentational aspect of the budget, the documentcomes out to be reasonably well adapted to the fundamental needs of the times -- the uplift of the economy from recession, the encouragement to the public and the private sectors, no obstruction to foreign flows of capital, provision of much larger infrastructural developments, budgeting on adequate resources without disincentives and, for that matter, something for everyone.