Budget 2009 pleased, but didn’t promise bold, affirmative action
If Election 2009 was a market-maker event for the stock market of India, Budget 2009 was a market-dampener of an event. The stock market tanked 859 points!
This budget plans for an expenditure of RS 10,20,838 crore. At the same time, it envisages a fiscal deficit of 6.8 percent. Add to that the fiscal deficit of 3.5 percent at the state level, and the nation has a deficit budgetary number of 10.3 percent. If we are to be a nation on the fast-track of development and want to insulate ourselves from debt-traps of every kind, we need a fiscal deficit that does not go beyond the 3.5 percent mark. In this budget, therefore, we are far away from that.
In many ways, that is the biggest angst of this budget. Where is the language of fiscal prudence? There is a whiff of disinvestment coming sometime. Possibly when the markets are robust again. There is also a whiff of the deregulation of petroleum prices and a possible auction of third generation (3G) radio spectrum (which is typically outside the ambit of the budget). But these are not enough to make a market. They are not enough to clearly convey the game plan of a government that wants to take the nation on fast track development.
What I love about the budget is its “aam aadmi” focus and feel. The truth is that India cannot get onto the fast-track of development if three-fourth of her people are nowhere on the spectrum of development. The radar of development must cover every one of our one billion plus people. Budget 2009 lays out a plan of inclusive development. Investment in infrastructure is bound to touch the life of every common man.
In many ways, Budget 2009 pleased everyone by small incremental baby-steps. It pleased the salaried class with IT deductions that are up by Rs 10,000 to Rs 15,000, depending on whether you are senior citizen. It pleased the corporate enterprise with an abolition of Fringe Benefit Tax (FBT), although the FBT contributed a piffling RS 5,000 crore to the exchequer. The corporates asked for it, and they got it. It also pleased women with branded gold jewellery excise formats. But it missed the opportunity of taking bold and affirmative action that spells out strong policy and directional intent. The language of consensus, at times, is a heavy anchor that restricts growth altogether. It inhibits it at crucial times of a take-off stage in an economy.
If Election 2009 was a market-maker for the Indian stock market, Budget 2009 was a market-dampener
This is an “aam aadmi” budget. But there is something called an “aam-aadmi Corporate” as well. This is the small and medium enterprise sector in the country. A sector that contributes 52 percent of the GDP at large. Enough is not done for this category, which is in trouble today because of the global meltdown and the reduction of exports. Every small artisan in Moradabad is in trouble. Exports have fallen by more than 80 percent. The entire industry of Moradabad, which used to export artifacts worth RS 2,500 crore, is today thriving on wafer-thin margins and a reduced export value income of RS 500 crore.
But I am sure there is a method to the madness of this budget. The UPA government, in its five-year tenure, will present four more budgets and hundreds of policy documents that will spell out the course that India will take. Going by the mandate it has to rule, I believe justice will be done.
Bijoor is a brand-strategy specialist and CEO, Harish Bijoor Consults Inc