"The ambition of the greatest man of our generation (Mahatma Gandhi) has been to wipe every tear from every eye. That may be beyond us, but as long as there are tears and suffering, our work will not be over"JAWAHARLAL NEHRU/ 'TRYST WITH DESTYNY' SPEECH ON AUGUST 15,1947
Our readers are the cream of Indian society. Our interest in the Budget revolves mostly around our immediate concerns: Will I take home a fatter salary, will my investments yield higher returns, will car prices fall, will my business benefit? Our Budget edition seeks to address such concerns. But there is another India with which many of us have only a passing acquaintance. It’s an India of several hundred million people who barely make a few rupees a day. They live without a roof over their head, and die without medical treatment. They cannot write or spell their names, far less read the Budget edition of this paper…It’s time we gave the other India hope of a better life–not just because it’s the right thing to do, but also because if we don’t, ‘our India’ won’t grow and prosper in the long run...Call it what you will—a Cinderella moment, India in search of Bharat—but we need to recognise that a Budget must be as much about the girl in the picture as it is about us. She cannot continue to be just another blurred face in the car window. She, too, must be able to dream—of bidding farewell to alms...
Shankar Raghuraman TIMES NEWS NETWORK
The Economic Survey advocated big bang reforms, but finance minister Pranab Mukherjee chose instead to play the role of the ‘alm aadmi’ —handing out goodies to individual taxpayers in the form of higher exemption and abolition of surcharge, hiking outlays on the social sector and refusing to chant the reforms mantra. The contrast with the reforms rhetoric that characterized most Budget speeches in the last 18 years was marked. Far from laying out a roadmap for divestment or privatization, Mukherjee spoke proudly of Indira Gandhi’s “wise and visionary” nationalization of banks four decades ago, which he said had ensured that India’s banking system didn’t go down with the West’s in the financial meltdown. The sense of achievement with which he spoke of government expenditure crossing Rs 10 lakh crore for the first time ever must also have left the reformers wringing their hands in despair. Rather than sounding apologetic about burgeoning spending and a fiscal deficit that’s touched 6.8% of GDP—a level not seen since the reforms began in 1991—the FM was actually boasting about the fact. There is also bound to be disappointment in the same circles about the fact that there wasn’t even a deadline set for returning to the path of fiscal chastity as defined by the Fiscal Responsibility and Budget Management Act (FRBM). The reaction of the markets betrayed this sense of being let down, but many industry leaders told TOI that better sense would soon prevail. Big government, after all, is not such a bad thing for a corporate sector desperate for demand, a fact that is more clearly recognized in the aftermath of the global crisis than it was before. Spending your way out a slowdown is no longer considered profligate. A sizeable chunk of the projected increase in spending was forced, since high borrowings last year have pushed interest payments up by almost Rs 33,000 crore. But the Budget also provided for sharp jumps in spending on defence (24%) and internal security (31%). There are also significant increases in spending on infrastructure like power and roads as well as on the social sector—employment generation, health, education, rural development. In many cases, the increases are not quite as large as the FM made them sound in his speech if one compares the Budget outlays for the current year with revised estimates for last year rather than budget estimates, but that’s a minor sleight of hand that’s par for the course. STOCK MARKET PLUNGES The markets aren’t happy. The sensex plunged by 870 points (5.8%)—the sharpest ever after a Budget in both absolute and percentage terms, and the biggest since the Satyam scandal hit the headlines on January 7. All but two stocks in the 30-stock bellwether index took a hit. Investors lost Rs 2.5 lakh crore. Reasons: absence of a clear roadmap on reforms and fiscal correction, no relief on corporate tax, higher MAT. Increased borrowings to fund higher spending, they fear, will push up interest rates. There is a counter-view that in a few days the markets will do a U-turn—once they appreciate the fact that personal tax relief will put more money in the hands of investors and consumers, and higher govt expenditure on infrastructure, rural housing and NREGA will act as an economic stimulus for industry. HDFC chairman Deepak Parekh was blunt: “The markets have not understood the Budget.” Allocation for minorities, tribals goes up three-fold Schemes for minorities and tribals have seen their allocations go up by up to three times, even if on a low base, another sign that the UPA is conscious of its promise of inclusive growth. The fact that the biggest tax break actually went to the highest income bracket, by way of abolition of surcharge on incomes above Rs 10 lakh may sound odd in that context, but it was justified on the basis of simplifying the tax structure. Mukherjee twice quoted Kautilya as the inspiration for his economic decisions, but he also showed the kind of political acumen for which Kautilya was equally famous. The crucial assembly elections in Maharashtra later this year seemed to have nudged the FM on a couple of occasions. The problem of debts owed to private money lenders in some regions of Maharashtra not being covered by the scheme would be looked into by a task force, the FM said. This was over and above the additional six months given to large farmers all over the country to repay 75% of their debts under the debt waiver scheme. Mumbai's getting Rs 500 crore under the urban renewal mission programme for storm water drainage may not be entirely unconnected with elections. While there was no concrete promise of disinvestment, the FM did say that the floor on non-promoter holding in all listed companies needed to be hiked. There was no indication of what that floor would be, but since he expressed dissatisfaction with the fact that the average public holding in listed firms in India is 15%, it would clearly have to be higher than that level. If that logic is applied several PSUs might have to offload stake in the markets, as indeed would many private firms (such as Wipro, Oracle and DLF). The logic for disinvestment, at least in some of the PSUs already listed, appears to have been put in place. Subsidy bill to slide Rs 18,000 cr on low urea dole New Delhi: Subsidy bill on food, fertilizers and kitchen fuels will drop by Rs 18,000 crore to Rs 111,275 crore in 2009-10 mainly due to a sharp cut in the urea handout. Subsidy on fertiliser will fall to Rs 49,980 crore in 2009-10 from Rs 75,848 crore in the revised estimate for ’08-09. But the food subsidy bill may go up by 20% to Rs 52,489 crore from Rs 43,627 crore in the last fiscal. The total subsidy outgo in 2008-09 was Rs 1,29,242 crore. TEAM TOI
(Times of India 07/07/2009)
Our readers are the cream of Indian society. Our interest in the Budget revolves mostly around our immediate concerns: Will I take home a fatter salary, will my investments yield higher returns, will car prices fall, will my business benefit? Our Budget edition seeks to address such concerns. But there is another India with which many of us have only a passing acquaintance. It’s an India of several hundred million people who barely make a few rupees a day. They live without a roof over their head, and die without medical treatment. They cannot write or spell their names, far less read the Budget edition of this paper…It’s time we gave the other India hope of a better life–not just because it’s the right thing to do, but also because if we don’t, ‘our India’ won’t grow and prosper in the long run...Call it what you will—a Cinderella moment, India in search of Bharat—but we need to recognise that a Budget must be as much about the girl in the picture as it is about us. She cannot continue to be just another blurred face in the car window. She, too, must be able to dream—of bidding farewell to alms...
Shankar Raghuraman TIMES NEWS NETWORK
The Economic Survey advocated big bang reforms, but finance minister Pranab Mukherjee chose instead to play the role of the ‘alm aadmi’ —handing out goodies to individual taxpayers in the form of higher exemption and abolition of surcharge, hiking outlays on the social sector and refusing to chant the reforms mantra. The contrast with the reforms rhetoric that characterized most Budget speeches in the last 18 years was marked. Far from laying out a roadmap for divestment or privatization, Mukherjee spoke proudly of Indira Gandhi’s “wise and visionary” nationalization of banks four decades ago, which he said had ensured that India’s banking system didn’t go down with the West’s in the financial meltdown. The sense of achievement with which he spoke of government expenditure crossing Rs 10 lakh crore for the first time ever must also have left the reformers wringing their hands in despair. Rather than sounding apologetic about burgeoning spending and a fiscal deficit that’s touched 6.8% of GDP—a level not seen since the reforms began in 1991—the FM was actually boasting about the fact. There is also bound to be disappointment in the same circles about the fact that there wasn’t even a deadline set for returning to the path of fiscal chastity as defined by the Fiscal Responsibility and Budget Management Act (FRBM). The reaction of the markets betrayed this sense of being let down, but many industry leaders told TOI that better sense would soon prevail. Big government, after all, is not such a bad thing for a corporate sector desperate for demand, a fact that is more clearly recognized in the aftermath of the global crisis than it was before. Spending your way out a slowdown is no longer considered profligate. A sizeable chunk of the projected increase in spending was forced, since high borrowings last year have pushed interest payments up by almost Rs 33,000 crore. But the Budget also provided for sharp jumps in spending on defence (24%) and internal security (31%). There are also significant increases in spending on infrastructure like power and roads as well as on the social sector—employment generation, health, education, rural development. In many cases, the increases are not quite as large as the FM made them sound in his speech if one compares the Budget outlays for the current year with revised estimates for last year rather than budget estimates, but that’s a minor sleight of hand that’s par for the course. STOCK MARKET PLUNGES The markets aren’t happy. The sensex plunged by 870 points (5.8%)—the sharpest ever after a Budget in both absolute and percentage terms, and the biggest since the Satyam scandal hit the headlines on January 7. All but two stocks in the 30-stock bellwether index took a hit. Investors lost Rs 2.5 lakh crore. Reasons: absence of a clear roadmap on reforms and fiscal correction, no relief on corporate tax, higher MAT. Increased borrowings to fund higher spending, they fear, will push up interest rates. There is a counter-view that in a few days the markets will do a U-turn—once they appreciate the fact that personal tax relief will put more money in the hands of investors and consumers, and higher govt expenditure on infrastructure, rural housing and NREGA will act as an economic stimulus for industry. HDFC chairman Deepak Parekh was blunt: “The markets have not understood the Budget.” Allocation for minorities, tribals goes up three-fold Schemes for minorities and tribals have seen their allocations go up by up to three times, even if on a low base, another sign that the UPA is conscious of its promise of inclusive growth. The fact that the biggest tax break actually went to the highest income bracket, by way of abolition of surcharge on incomes above Rs 10 lakh may sound odd in that context, but it was justified on the basis of simplifying the tax structure. Mukherjee twice quoted Kautilya as the inspiration for his economic decisions, but he also showed the kind of political acumen for which Kautilya was equally famous. The crucial assembly elections in Maharashtra later this year seemed to have nudged the FM on a couple of occasions. The problem of debts owed to private money lenders in some regions of Maharashtra not being covered by the scheme would be looked into by a task force, the FM said. This was over and above the additional six months given to large farmers all over the country to repay 75% of their debts under the debt waiver scheme. Mumbai's getting Rs 500 crore under the urban renewal mission programme for storm water drainage may not be entirely unconnected with elections. While there was no concrete promise of disinvestment, the FM did say that the floor on non-promoter holding in all listed companies needed to be hiked. There was no indication of what that floor would be, but since he expressed dissatisfaction with the fact that the average public holding in listed firms in India is 15%, it would clearly have to be higher than that level. If that logic is applied several PSUs might have to offload stake in the markets, as indeed would many private firms (such as Wipro, Oracle and DLF). The logic for disinvestment, at least in some of the PSUs already listed, appears to have been put in place. Subsidy bill to slide Rs 18,000 cr on low urea dole New Delhi: Subsidy bill on food, fertilizers and kitchen fuels will drop by Rs 18,000 crore to Rs 111,275 crore in 2009-10 mainly due to a sharp cut in the urea handout. Subsidy on fertiliser will fall to Rs 49,980 crore in 2009-10 from Rs 75,848 crore in the revised estimate for ’08-09. But the food subsidy bill may go up by 20% to Rs 52,489 crore from Rs 43,627 crore in the last fiscal. The total subsidy outgo in 2008-09 was Rs 1,29,242 crore. TEAM TOI
(Times of India 07/07/2009)
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