Thought for the day
” The production of
too many useful things results in too many useless people.”
-
Karl Marx (German, 1818-1883)
Word for the day
Tumultuary (adj)
Confused; disorderly;
haphazard
(Source:
Dictionary.com)
Teaser for the day
FIFA World Cup over. Let's catch up some
sleep, markets permitting!
Union budget FY15: Customary praise and misdirected criticism
The first budget of Modi government has evoked mixed response
from various quarters.
The views supporting the budget are customary and sound rather
obliged to praise it. These voices have come mostly from large industrialists.
Their views are mostly driven by hope. "It's only a beginning",
"they had little time", "It is a trailer, big picture will
emerge only in February" etc. are common refrains. I believe no one taking
these views seriously; not even those expressing these views.
On the other hand the criticism has mostly come economists,
analysts, political observers and political opponents. Their arguments are even
more bizarre. "No big bang", "continuation of UPA
policies", "straight from Chidambaram's book", "too
ambitious" are the common headlines in this camp.
I have supported the budget statement because for
the first time in couple of decades, I saw a government focusing on the
intrinsic strengths of Indian economy rather than overemphasizing on the
weaknesses. I have reasons to believe that this trend will continue till 2019
at the least. To me the taxation structure appears skewed in favor of the rich
and might need correction to improve purchasing power of middle and lower
middle class consumer.
Given the fragile state of Indian as well global economy, it is
prudent to maintain status quo and not make too many experiments. I do not see
anything wrong in this.
The UPA had shifted its stance towards fiscal prudence and
monetary corrections in summer of 2013 with PC and Rajan both taking some
serious measures. Almost everyone, including financial markets, recognized,
lauded and supported the effort. I do not understand why people expected a
material departure from this set course.
I have reiterated my views on "big bang
reforms" rather frequently. I strongly believe that PMGSY (rural road
program) has and will continue to bring more benefits to large corporate than
multibillion dollar mega projects. These roads bring food and labor to them and
take their produce back to the 60% of Indian populace. Trust me the quintessential
"India Story" is all about rise in consumption at the bottom of the
pyramid.
Insofar as the fiscal targets are concerned, I see little
justification for the skepticism. I think 4.1% fiscal deficit is certainly
achievable, if the government just maintains its current pace of fiscal
tightening and moves ahead with long stalled sale of assets like Hindustan
Zinc, Balco, and ONGC etc.
GAAR has been a contentious issue for couple of years now. While
the retroactive implementation of these provisions (or any substantive tax
provision) is not desirable, the ongoing litigation has queered the pitch for
the government. I think the last word on this matter is still not out and a
rational decision will be taken soon.
Inflation is a concern not just this parched summer but for next
many years till the supply augmentation efforts of the government yield result.
I guess a review would be in order only after the government completes half the
term.
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