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Are We Growing Up?

Omkar Goswami

 

As a school going kid in a TV-less world, there was an annual event of acute gravity in the Goswami household. It was on the last working day of February. We had to be very quiet, preferably scarce. Baba, my father, would quickly change into kurta-pajama and nervously await the 9 pm news. Five characteristics pips later, it would be: “This is All India Radio. The news read by Surajit Sen…” And Baba would sit, pencil in hand, taking in everything. Being a boxwallah, most of it was with great anguish, for each budget in the 1960s meant greater taxes for the salaried class.

 

Up to even last year, the Budget was a major event. At the same time in 2005, the Economic Times had already begun to kill us to death with screaming headlines consisting of ridiculous puns. A couple of TV channels had already started their pre-Budget coverage, Everyone was talking of Mr. Chidambaram’s ‘dreams’. The great Indian annual fiscal show was already on the move.

 

This year, it all seems strangely silent. To be sure, by the time you read this, the hype will have begun. Yet, something tells me that most people think of this Budget to be a bit of a yawn. Of course it matters; we shall all tune in on D-Day; there will be some pre- and a lot of post-Budget guru-giri; and corporate honchos will compete to give the Finance Minister 9 out of 10. Even so, I think it will be a lower-key affair than before — lower than any year since the advent of economic liberalisation.

 

If that is indeed so, it would be a very good development. When I was doing my Ph.D in England, the budget was a major event. Everyone wanted to know what Mrs Thatcher’s first Tory government had in store. The BBC did special programmes, and very many people actually watched these glued in front of their tellies. Today, few could care less about what John Brown has to offer. Britain has matured to the point where the budget is passť.

 

That would be too much to expect in India. The Union Budget matters, and will continue to do for the next several years. Yet, people have probably stopped believing in the importance of an annual magic show. The typical response that I have heard is, “What can Chidambaram do?”

 

There is truth in this. Most key policies to ensure that we remain firmly in the region of 8 per cent GDP growth over the near future have little to do with the Union Budget. Over the next decade, India needs at least $450 billion for funding roads, power, railways, ports, airports and telecom. At least two-thirds of this has to come from public financing — something that requires greater fiscal rectitude, and not grand giveaways. With over Rs.50,000 crore going in for the employment guarantee programme and little by way of revenues from privatisation, there is hardly any scope for fiscal generosity. Nor will Chidambaram be expected to commit fiscal hara-kiri by raising marginal tax rates as propounded by the red brigade. There is actually little that a Finance Minister can do today. He will most likely drop the peak tariff rate by another five percentage points. He may modify some odious elements of the Fringe Benefit Tax and earn the eternal gratitude of business. He may tinker with tax on services, and bring it in line with the CENVAT rate of 16 per cent. He may offer the odd sops and levy a silly, irritating tax or two. And he will recite a few couplets.

 

But at the end of day, unless I am mistaken, Budget 2006-07 will be a “give some-take some” exercise — directionally aligned to reforms but nothing earth shattering. And that’s what it should be. Reforms have to be continuous; they can’t be national episodes centred around the budget, credit policies and the like. We have crossed that stage. And it is best stated by Betrolt Brecht in his Life of Galileo. At the end of the play, when Galileo’s pupil, Andrea, cries loudly, “Unhappy the land that has no heroes”, Galileo replies, “No. Unhappy the land that needs a hero.” 

 

Published: Business World, February 2006

 

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