The Hindu Business Line : Market frowns, but does that matter?

The BSE Sensex tanked by 869 points after the presentation of the Union Budget and a plethora of television channels lined up stock market and other industry experts to explain how equity investors had expected much more “positive news” on divestment, FDI, opening up of the insurance, banking and other sectors, etc.

But clearly the Finance Minister, Mr Pranab Mukherjee’s priority was focussed on the central message from elections 2009, where the electorate had given a rousing mandate to the UPA, particularly the Congress Party.

And that mandate did not come from corporate India or stock market traders and investors. It came from a section of society to which schemes such as the NREGA (National Rural Employment Guarantee Act) provided a window to simple meals that could be earned with dignity.

Much of it also came from farmers whose debts were waived in the last Budget through a Rs 60,000 crore scheme, later revised to Rs 71,000 crore.

Allocations, no surprise

Little wonder then that Prannabda’s Budget speech was laced with words such as “vulnerable segments”, “inclusive growth”, “welfare delivery mechanism” and “welfare of minorities”. For 2009-10, NREGA got a whopping 140 per cent hike and a funding increase by Rs 39,100 crore.

While rural electrification got Rs 7,000 crore, rural housing Rs 20,000 crore, the national rural health mission got an additional Rs 2,057 crore to the amount (Rs 12,070 crore) provided in the interim Budget.

Agricultural debt waiver has been extended by an additional six months and some of us from glittering cities who’ve witnessed the trauma of our farmers whose crops wither and die on parched lands for want of the barest minimum irrigation security, will not grudge the allocation of Rs 1,000 crore towards accelerated irrigation project.

Yes, we can all legitimately raise questions about the delivery mechanism and the siphoning of much of these allocations by a corrupt delivery network.

Rahul Gandhi, and before him Rajiv Gandhi, raised concern over this, and now that his party leads the UPA with much greater strength, he’d better do something about it.

Power of the vote

We are a democracy and reserve the rights to question our netas and make them accountable.

But we have not the tiniest of right to question the huge social sector spending that is going to contribute its bit to the gaping fiscal deficit.

The sulking stock market can go into a tailspin and plunge; its commentators can question the “packaging” of the Budget speech and sneer at its lacklustre delivery. But in a democracy the power of the vote cannot be undermined.

If market players think the Budget belongs only to them and should mark in capital letters words such as Divestment, FDI, Privatisation, and are in no mood to wait for these to materialise — as undoubtedly they will sometime down the line — so be it.

But ask those who know the equity market well, and they’ll tell you that if a Manmohan Singh-led UPA government can send the Sensex dancing up by a stupendous 15 per cent on a single day, sense should soon return to the market in a couple of days.

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