The Hindu Business Line : Unnecessary frenzy

February 1977. I was starting my career as a young management trainee in DCM. Around lunch time, two days before the Union Budget was to be announced, rumours went round that petrol prices would go up. So, offices emptied, people dashed with their two-wheelers and cars to petrol-pumps that saw long queues of anxious people waiting to get their vehicles topped up — their last chance before prices changed.

The phenomenon left me thinking. How far would the economic benefit of that one last fill go? What is the size of the arbitrage in the larger scheme of things? It was an amazing sight of an anxiety-ridden middle-class. To them, that one-time gain, more psychological than real, was what the Budget was all about.

Meanwhile, there were two other classes of people — one influencing the Budget through behind-the-curtain-mechanisms; the quota and licences, the withdrawal of taxes and notifications that suited one business house versus another.

The other remained completely unaware of the goings on, indeed untouched by it all. That second, of course, was the silent majority.

Thirty years later , I am afraid, the situation is pretty much the same. There is the burgeoning middle-class, more self-confident than what it was 30 years back, but in the same state of mental poverty.

Then there are people who have a huge stake in the process and the p0rovisions — they remain as engaged, active and benefited. But 70 per cent of India has no idea what is going on and has no stake in it. There are systemic and structural reasons why things are the way they are.

A country must have a long view of time at the apex level on all major issues — be they matters of developmental priorities or other strategic dimensions that impact national well being. The national direction in matters of infrastructure, education, health, defence cannot be things that flip-flop every year.

Why should rates of taxation, and the principles behind them, change every year? Why should the developmental allocations have effectively a ten-month life, the balance two going into a pre-Budget freeze and a post-Budget no-man's land in which obfuscation leads to inaction?

The other thing that confounds me is the huge overhead of the annual Budget creation process itself. Is this the most efficient way of doing things? What is the cost of it all? Who is paying for it? Or, are we simply following what the British taught us as a parliamentary process 60 years back? We all admit that everything around us has changed and the world has changed in many fundamental ways. How come that does not impact the way the nation must manage its money?

Finally, I look at the frenzy with which the decision-makers and the media get involved. Talking heads pop up from television sets and make profound observations and year after year, newspapers vie with one another to get the predictable comments on predictable questions: Pro-poor or anti-poor? Pro-industry or anti-industry? Inflationary or deflationary? Who really cares?

In no other country I have seen the level of noise that gets generated on an activity that should be reformed and routine. An activity that gets driven by the strategic mandate of a stable government (did someone say `stable'?) that comes on an electoral plank of fiscal regulation. Thereafter, let the process be less visible and its impact more significant.

(The author is Co-founder and Chief Operating Officer, MindTree Consulting.)