Free the budget office

This refers to the article ‘How not to contain the fiscal deficit’ by Pradeep S Mehta (January 23). The fiscal policy adopted by the government should be counter-cyclical, which means it should not contract with a slowing economic condition and expand with a growing economy. This was brought out well by the chief economic advisor in his latest report on the state of our economy. We need an independent budget office and its services should be used by the government to manage the deficit.

The article points out that disinvestment receipts are temporary; that is a valid point. But in the current economic scenario we need public investment to kick-start the economy. We cannot disband the fiscal deficit targets. The private sector is highly leveraged and they cannot invest. So disinvestment receipts can be used for public investments; selling off our public sector shares should not be seen as selling the family silver. It is just that we are better off owning roads, bridges, seaports and airports than owning shares in public sector companies.

Infrastructure is a much more productive investment for the government to hold than shares. The government has about 5 per cent of GDP in these shares by not reducing its stake below 51 per cent. The government should sell 1 per cent of shares and invest in infrastructure. Still the government owns the majority in these companies; fiscal deficit targets can be met as planned, so we need to have a long-term plan for disinvestment.

CR Arun

Email

One area left uncovered in the article is the relation between high fiscal deficit and inflation. Government deficit will result in money creation and resultant inflation. Another reason for the high deficit rate is the pending tax recoveries to the tune of ₹8 lakh crore. Low tax recoveries will lead to cuts in expenditure that will, in turn, result in cancellation or low allotment of funds to ongoing infrastructure and development projects affecting growth.

The use of non-tax revenues such as disinvestment proceeds from PSU sell-offs to make up for shortfall in tax revenues is an unhealthy trend being followed by successive governments. The suggestion for a road map to realise outstanding revenues and to revisit unnecessary exemptions could reduce deficit to a great extent, if implemented impartially.

Mathew Abraham

Thiruvananthapuram

Hosting Obama

Barack Obama’s visit has to be viewed positively. At the same time, the potential pitfalls of cosying up to the US have to be borne in mind. No doubt we have reason to exult over hosting a ‘charismatic’ world leader and feel a greater sense of our own importance, but we should be aware of the roadblocks in forging a partnership with the US on an equal footing to mutual benefit.

For all the show of warmth, the US contingent will be intent on hammering out agreements to tap into India’s vast market. India should assert itself on sticky points ranging from the civil nuclear energy deal, FDI, IPR, climate change and clean energy, to WTO-related matters. India must not be seen as a sidekick aiding the US in its efforts for full-spectrum domination of the world. Obama would do well to gift the Indian Prime Minister a secular book or a copy of the American constitution and visit the churches in Delhi vandalised by bigoted miscreants for the promotion of secular humanity and religious tolerance.

G David Milton

Maruthancode, Tamil Nadu

BCCI should clean up

The Supreme Court’s order in the IPL scam is further testimony that people with conflict of interest should not be allowed to run the BCCI. With the Court’s decisive order on the involvement of his son-in-law Gurunath Meiyappan and Rajasthan Royals’ owner Raj Kundra, IPL is under darker clouds than before. Though we all hope reforms see the light of the day in BCCI, it would be advisable to scrap IPL this year till its house is in order.

Bal Govind

Noida, Uttar Pradesh

Ethics rules

With reference to ‘Ethics is chic’ by C Gopinath (January 23), it is to the credit of regulators in the UK, US and Switzerland that they have managed to extract exemplary fines from six large banks for manipulating the exchange market. In India, too, the prevalence of a robust system of monitoring will deter financial firms from indulging in shady deals. Compliance of business ethics by all concerned may be an imaginary world. But those who practise it gain added trust and good will. Ethics is chic not only in business but in every sphere of life.

CG Kuriakose

Kothamangalam, Kerala

Many questions

The IPL verdict does not appear strong and leaves many issues unaddressed. The Mudgal Report contained names of some cricketers which was not made public. The verdict does not say anything about the players. Have they been not found guilty or have they been let off just like that? Where betting is concerned, it is difficult to imagine N Srinivasan was not aware of his son-in-law’s activities. The apex court has concluded that Meiyappan was a team official. This means he had earlier lied that he was merely an enthusiast. This deception has not been viewed seriously.

The new high powered committee will quantify the punishment for Meiyappan, CSK, Raj Kundra and RR. But will the panel have the power to prosecute the guilty like sentencing them to jail? Merely imposing fines and a penalty will not be adequate. The larger issues were betting and spot fixing and the possible money laundering flowing from them. The Supreme Court should have directed the CBI and ED to investigate this angle.

TG Venkateswaran

Chennai

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