CIRCUIT BREAKER. The big fat Indian Budget

Ashutosh, just out of journalism school, was raring to go on his first assignment at the Business Times . Only this morning, the editor had asked him to chip in with the biggest annual event for business papers — the Budget. “Get cracking and meet as many industry folks as possible to get their views. We’re running a pre-Budget series,” his editor said.

Before embarking on this momentous assignment, Ash called up his uncle, the economics professor, for tips. If he was covering the Budget, what was the important stuff he should be writing about? What sort of probing questions should he be asking?

“This year’s Budget is critical, young man, and very tricky. The Finance Minister (FM) needs to come up with a big stimulus to jolt the economy out of its rut and tackle inflation. He needs to step up Central spending on big-ticket projects — maybe city infrastructure and freight corridors. He needs to raise tax rates and be really frugal with subsidies. Whatever he does, the fiscal deficit must not exceed the Lakshman rekha of 4.1 per cent. If he doesn’t manage all this, we’ll be finished. International rating agencies will downgrade India, foreign capital will pull out and RBI will not budge on rates. The economy will be stuck in an L-shaped curve forever.”

“Wow!” thought Ash, “While in college, I never thought the Budget was so life-altering. Mostly used to ignore it and go to the movies. I really need to do some reading up.” The bureau chief interrupted his musings by handing him a list of meetings to attend.

Ash arrived late and a little out of breath at a meeting held by the all-India bankers’ association. A portly banker was droning on about how the Centre needed to get a grip on its wasteful spending and fix its deficit so that the RBI could cut interest rates. He then outlined the many woes facing the banking sector — high interest rates, good companies not borrowing, bad ones borrowing too much, and how banks were grappling with a mountain of bad loans.

“So sir, what do you want from the budget?” asked Ash, eager to get to the point.

“The banking sector is the lifeblood of the economy,” said the banker. “We have a simple request. The Government should set up a national bad loan fund and just buy up all our bad loans, about ₹1 lakh crore of it. Then we can resume lending to all the needy sectors with a clean slate. It’s a small price to pay, you know, to stimulate the economy.”

But that’s a fourth of all the corporate tax the FM collected last year, thought Ash, and rushed to meet farmers from Vidarbha, who had assembled at the Trident hotel. The leader of the group said: “Successive governments have completely neglected hard-working farmers of Vidarbha. The prices of our crops have simply not kept up with inflation, the monsoon keeps failing and we are forced to take so many loans. The Centre allocated ₹5,000 crore to irrigation projects and ₹1,000 crore to loan waivers last year. But that is so inadequate; so many of our brothers continue to commit suicide. What we need is a solid ₹30,000 crore fund especially to develop the Vidarbha region.”

Quickly scribbling this in his notebook, Ash rushed to the All India Chambers of Commerce where a big jamboree was in progress, with dozens of industry captains jostling each other. “Here, boy, take this pre-Budget document for coverage,” said the chamber’s president, handing Ash a glossy 200-page book titled India Inc’s Dream Budget . It had wish-lists from 25 different industries, neatly sorted in alphabetical order.

After a brief introduction stressing the need to set the fiscal house in order and reduce subsidies to the masses, the booklet dived straight into corporate India’s demands.

“Jackpot! This should take care of stories for an entire month!” whooped Ash, skimming through impassioned pleas for tax, excise and import duty concessions from a variety of sectors that he didn’t even know existed. He was struck by so many industry members displaying an active social conscience.

For instance, the plastic furniture-makers made a strong case to save 32,000 hectares of forests by reducing the excise duty on plastic furniture from 12 to 8 per cent. This, they argued, would help do away with all that tree-destroying wood furniture. The jewellers’ association put forth a demand to cut the gold import duty from 10 to 2 per cent so that the jobs of thousands of skilled artisans could be saved.

But Ash was stumped by some of the other demands. For instance, every industry seemed to want cheaper raw materials and more expensive finished products. And as one sector’s finished product was often another’s key input, he noticed that many wish-lists directly contradicted each other.

While sugar manufacturers were all for raising the import duty on sugar to 40 per cent to shield farmers, beverage- makers opposed this tooth and nail. While soap-noodle makers wanted duty-free palm oil to flood in, the vegetable oil industry was dead against this.

A well-known activist was just then on TV, stridently asking the FM to ignore vested interests and slash all duties and taxes to give the aam aadmi a respite from inflation.

Ash decided to lug all the notes home where his mother was busy plugging away at her laptop. “So, mom, what is on your Budget wish-list?” Ash asked, hoping for a human interest angle.

“I wish they would stop hiking these petrol and diesel prices; it is wreaking havoc on my monthly commute bills,” she complained. “And if they’re really going to hike LPG prices by ₹20 each month, I’m going to outsource cooking to Saravana Bhavan. It is just too much trouble.”

“There goes one major idea to trim the ₹2.6 lakh crore subsidy,” mumbled Ash to himself.

After pulling a few all-nighters to write out the wish-list stories, Ash decided to pop into office and actually listen to the Budget speech on July 10, for the first time in his life.

“Come on, yaar . It’s just a minister reading out a boring speech. Even people in Parliament don’t listen to the Budget, they’re nodding off in the back benches. Come, let’s catch the new superhero movie,” urges his friend.

“Well, the FM is a superhero, man. Do you know how many people are depending on him to rescue the economy? He’s got to single-handedly revive investments, beat inflation into submission, fill in the holes left by the previous government and yet keep those rating agencies happy with a low fiscal deficit. What’s more, he doesn’t have a secret billionaire to fund him. He has got to produce the money out of thin air. How many of your superheroes can do that?” retorted Ash.

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