The Hindu Business Line : Some bold innovations

SO MUCH has been said from the minute the Budget has been presented. Any more on the numbers and expenditure allocations (which have their usual share of populism) would only mean diminishing returns. A look, therefore, at the innovative features of the Budget.

Here is one important innovation, requiring some courage: "The key to empowering the Scheduled Castes and Scheduled Tribes is to provide top class education opportunities to meritorious students... a short list of institutes of excellence will be notified, and any SC/ST student who secures admission in one of those institutes will be awarded a larger scholarship that will meet the requirements for tuition fees, living expenses, books and a computer."

An innovative zeal is visible in regard to gender sensitivity. "... it is only a beginning and, in course of time, all Departments will be required to present gender budgets as well as make benefit-incidence analyses... "

In the area of skill development, the Minister has proposed the innovative Government and industry partnership. Details of the proposed Skills Development Initiative are yet to be worked out and one can be sure of some innovative ideas coming up such as development of a Skill Development Fund along the lines of the one in operation in Singapore.

There is also innovation in the expression of complex and controversial ideas. In the specific case of attracting FDI, the Minister said: "At the ... meeting ... the Finance Minister of China looked in my direction and told the gathering that China had received $500 billion worth of foreign investment since China opened its economy in 1980." UPA partners from the Left should take note.

Developing in Mumbai a Regional Financial Centre is an innovation in goal setting. The proposal at this stage is for a high-power Expert Committee to advise the Government on how to make Mumbai a regional financial centre. It is particularly gratifying is the proposal to develop Institutions of Excellence — the ultimate source of all innovations.

The Minister said: "What we need are world class universities, and we must make a beginning with one institution. We must have a university that will be ranked alongside Oxford and Cambridge or Harvard and Stanford. I am happy to inform the House that we have selected the Indian Institute of Science (IISc), Bangalore, which enjoys a high reputation as a centre of excellence in research and development. We shall work to make IISc, in a few years, a world class university. I propose to provide an additional sum of Rs 100 crore as a grant for this purpose."

The Minister should be complimented again for drawing the distinction between outlays and outcomes and proposing to put in place a mechanism to measure the development outcomes of all major programmes.

Courage and innovation have combined to produce some of the spectacular initiatives on the tax front. First, the peak Customs rate for non-agricultural products will be down to 15 per cent — signalling that Indian industries that can compete with those of the rest of the world.

For years we have been hoping to see a personal income tax regime where one need not keep on spending time (that is, one's valuable life) on how to be eligible to all sorts of exemptions. Simply allow savings to be deducted from income before arriving at taxable income.

This has now been done in the present Budget, though we need to still go a long way in consolidating all exemptions (maintaining old and disabled would stand when all others are consolidated).

The grand and final innovation comes towards the end of the Budget speech. "The NCMP requires the Government to introduce special schemes to unearth black money and assets."

A scheme proposed in the Budget is based on the premise that cash withdrawals leave no trail, and presumably become part of the black economy. The proposal is to levy a tax at the rate of 0.1 per cent on withdrawal of cash on a single day of over Rs 10,000 or more from banks.

The Minister is absolutely right that Rs 10 on a sum of Rs 10,000 is a paltry sum; yet, there is the eerie feeling that something is wrong with the proposal.

In fact the trick might be to have just one proposal to divert the attention from all else and then in the end `reluctantly' do away with it.

(The author is Professor Emeritus, GITAM Institute of Foreign Trade, Visakhapatnam. He can be contacted at bhanoji@vsnl.net)

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