GOOD BUDGET FOR BAD TIMES

SUNNY THOMAS

Peeling the budget onion live, three things emerge: numbers, survival, and nation! All budgets are about numbers, but Pranab Dada’s numbers strike a different stroke. They are about the number of numbers rather than the numbers per se. (In a democracy, the number of votes in Parliament matters more than the numbers un the budget). So without politics, the budget makes no sense; and, in fact, what gives economics its pre-eminence is the politics (popularity) behind it. After nuclear science, economics has emerged as the most sought-after discipline, and good economists are sought after by presidents and prime ministers the world over. Dada’s numbers in reality reflect the political composition of the Indian parliament.  

Homo sapiens display their elements when threatened as a species, or even as a political party or as individuals. The budget has something for each of its allies, in hope or in reality, that the general mood among them is one of optimism. After all, national politics is all about dividing the cake among the stakeholders.  

Thinking about the nation, the first thing that comes to our mind is the bravado of the one and only Dinesh Trivedi, ex-Railway minister: The nation comes first, the family second, and the party third. The statement has a ring of greatness, as Caesar’s `I went, I saw, I conquered!’ or Napoleon’s `The word impossible is found only in the dictionary of fools’ or Kennedy’s `Therefore my countrymen, Do not ask what the country can do for you, but always ask, what you can do for the country’. 

Notwithstanding his greatness, the man just disappeared like a ticketless traveller as the ticket examiner appeared in the compartment. The ticket examiner was, of course, Mamata Banerjee in Delhi! (Seeing what happened, a friend suggested that the National School of Drama should be shifted from Delhi to Kolkota since all the actors of this drama, Dada, Didi and Vedi, hail from the same state).    

The wisdom of this Grand Old Man, Pranab Mukherjee, is reflected in his budget because he found time to think of the nation and the economy even while sitting in an uneasy chair. But the budget would always be anti-people for CPM and directionless for BJP because the only person who can give a sense of direction is Narendra Modi! Every TV channel has budget prophets who ``sitting in the same studio last year forecast the budget deficit’’ proving the finance minister wrong all the time!  

The one criterion to judge any budget is the question, `Are the numbers credible?’ Dada’s numbers are mostly credible and where they tend to err is on the window-dressing side, which is the prerogative of every finance minister to project optimism rather than the ground reality. The finance minister’s optimism is as much important to the economy as that of the investors on the stock market.      

Perhaps the best analysis of the budget came from two outstanding citizens, Chanda Kochhar, CEO, ICICI Bank, and Kumara Mangalam Birla, chairman of the Aditya Birla Group. They indeed merit our time and enlighten us on the intricacies of the craft.

Kochhar: The budget is a pragmatic exercise aimed at growth and stability in the backdrop of the challenging year gone by and the broad consensus needed for various policy measures. Given the fiscal imperatives, it goes further to set a direction for fiscal consolidation to ensure long-term stability and sustainability of the growth momentum in the economy.

Fiscal 2012 has been a challenging year for the Indian economy. Both global and domestic factors resulted in a moderation of economic activity, led to persistent inflationary pressures and contributed to a deterioration in the current account and fiscal position.        

Birla: The finance minister has presented a credible and prudent budget. This is commendable, considering the multiple headwinds, by way of anaemic global recovery, persistent high oil prices, lower than budget tax revenues, sharp movements in rupee exchange rate and stubborn inflation during much of the year, resulting in high interest rates. The compulsion of managing a coalition government, no doubt, has narrowed policy option.    

Despite these negatives, the budget ends up as being pragmatic. It aims to rev up GDP growth from 6.9% in 2011-12 to 7.6% in 2012-13. This would be lower than the 8.4% GDP growth in the preceding two years. The budget also seeks to contain the fiscal deficit at 5.1% of GDP, down from 5.9% last year.  Clearly, a fine balance is sought to be struck between the twin imperatives of growth and fiscal soundness.

After reading Kochhar and Birla, both practitioners and high achievers, you tend to discount tons and tons of trivia aired or printed as expert comments. God save our experts! But don’t forget the Indian economy was the first to come out of the global meltdown and India, along with China, holds the key to hedge a second global meltdown!