This one failed to deliver a Big Idea. Most annual Budget exercises in India actually don't. Usually, they are a combination of four or five factors in no particular order. And almost forumalic, like Bollywood cinema. Sixteen reels make a film, of which 6 reels must be songs, 2 reels must have action sequences and so on. Figures are approximate and you should allow for evolving social mores. Ditto with Union Budget exercises. Needless to add, the formula will vary depending on the evolving political situations, among others.
So I thought I would look at this annual ritual (and shine the proverbial spotlight) from five vantage points rather than embark on a deep economic analysis which no one (including self) would follow. And submit that you could use the same five factors next year too.
Where existing policies are cleaned up, given finer shape and initiatives discussed in closed loops are showcased for mass viewing. Importantly, promises are presented afresh, with some garnishing. The best example of course is the transition to a Goods & Services Tax (GST). The one tax that will create the freedom of movement of goods across States in India, just like the European Union did, a while ago, across countries.
The documents released today say the areas of divergence with States have been narrowed. And a Constitution Amendment Bill is proposed to be introduced in the current session of Parliament. Also, there is significant progress in establishing the GST Network (GSTN), which will serve as the IT infrastructure for GST introduction. Incidentally, GST transition is the one area where industry is looking for an encylopedia of action steps, not a few lines which they know of.
Nevertheless, there is some forward movement, like in the case of the various, but minor reductions in customs duties. But what do you make of this one ? 'Augmentation of storage capacity through private entrepreneurs and warehousing corporations has been fast tracked'. Or, 'Issues relating to reconciliation of environmental concern from various departmental activities including those related to infrastructure and mining to be considered by a Group of Ministers'.
Or, 'Membership of various international fora engaged in anti money laundering, Financial integrity and Economic development, Exchange of information for tax purposes and transparency, secured.' And then the tax proposals, where you expect the most precision: 'System of collection of information from foreign tax jurisdictions to be strengthened. Well, well. All this is verbatim, including the syntax from the Budget Highlights from the Government's own documents. Moving On to the next Reel.
2. Plain Promise:
'Government to come up with a comprehensive policy for further developing public private partnership (PPP) projects. On corruption, the one issue that has rocked the country for the last six months - 'Group of Ministers constituted to consider measures for tackling corruption. Recommendations to be made in a time-bound manner.' Even promises can be drafted with more promise, one would think.
There is also a promise in the Budget documents that discussions are underway to further liberalise Foreign Direct Investment. This would instantly cause the antennas of those working in the retail and insurance industries to perk up. And maybe now, in Defense too. But the antennas have been going up and down for a decade now. So, take it easy is what I would say. Perhaps that is what you, as someone working in these areas, would say too.
3. The Big Idea Which Actually Replaces Old Bad Ideas:
Not forcing India's salaried class to file Income Tax returns and go through this annual tedium. That's really far sighted. But when you think hard, you wonder why it was there in the first place. But then, that's what most economic liberalisation is all about. And its good. No one is complaining.
Along these lines, generally speaking, observe that lower duties and `relief measures' for sanitary napkins, baby and adult diapers have been announced. Now, why did we charge higher duties for something like this anyway. Perhaps it does not matter, considering we are an aspirational nation. Like we aspire for good homes, cars and clothes and education for our children, we also now aspire for good diapers for them. Someone's done some sharp lobbying here, evidently.
I would include targeting of subsidies in this category for two reasons. One, work has been under way before the Finance Minister Pranab Mukherjee's speech on Monday. So this is among those many announcements which have been revisited. Second, it should have been fixed earlier. Notwithstanding all of that, this is the game changer I am very interested in.
Foreign investment has been permitted in domestic mutual funds. Not really a bad idea for not having it, but it could have come earlier. Of course, Know Your Customer (KYC) norms are always the concern for these things but its the same KYC that applies to equity schemes which has been there for a while. Earlier we were worried about too much capital flows and now we are also worried whether the flows are 'genuine'. Lets move on.
4. Being Politically (& Agriculturally) Correct
Every Union Budget will and should spend some time trying to address the problems of those of us who are untouched by the soaring indices or who benefited from the $1 million values that apartments in many Indian cities are beginning to command. But there is not sufficient to conclude with, for example, this: 'Removal of production and distribution bottlenecks for items like fruits and vegetables, milk, meat, poultry and fish to be the focus of attention this year.' Good to hear that.
More specifically, there are various allocations for initiatives ranging from bringing the Green Revolution to the Eastern region (Rs 400 crore) to nutri-cereals, protein supplement and accelerated fodder development. Good stuff, hope the scale is right. And then there is a National Mission for Sustainable Agriculture, where 'Government will promote organic farming methods, combining modern technology with traditional farmer practices.' You would have thought it was already happening...
5. The Ocassional Big Idea:
How about this, "Full exemption from basic customs duty to Crude Palm Stearin used in manufacture of laundry soap.' So it will be cheaper to wash your linen, yes ? Kidding, but the one thing that caught my attention was the exemption from basic customs duty and a concessional rate of central excise to imported batteries for electrical vehicles. And concessional excise duty of 10% to vehicles based on Fuel Cell Technology. We are getting somewhere.
We didn't go whole hog or write a new alternate energy policy - not that the Finance Minister's office would do so - but at least customs duties on solar lanterns have been reduced from 10 to 5%. But at least we record our efforts to put down that Big Idea like this classic one under Innovations: National Innovation Council set up to prepared road map for innovations in India.
6. The Interval
I know I said five vantage points but now, this is the most important part. In Bollywood, the Interval is the pause just after a dramatic Turning Point has been introduced. Its the kind of break that makes you not want to leave your seat to grab some popcorn or coffee. And yet you do because you want to be munching away so as to better relish the twist in the tale. And use the few minutes to ponder about what would come next. Will the the hero really marry the heroine ? Was he always the bad guy ? Will he die in the second half in spectacular glory ? Etc.
So instead of a two-hour continuous run, I propose an Interval. One where all parties rise, grab various refreshments, ponder, reflect and settle down to await the twists in the tale. Note that once the movie is over, you don't really think back and wonder whether the Interval was worth it. Its about getting entertained here and now. And that's what its increasingly about, isn't it ?