"What is tolerance? It
is the consequence of humanity. We are all formed of frailty and error; let us
pardon reciprocally each other's folly - that is the first law of nature."
—Voltaire (French,
1694-1778)
Word for the day
Encomium (n)
A formal expression of high
praise; eulogy. For example, "An encomium by the president greeted the
returning hero.
Malice towards none
What makes Maharana Pratap
great vs. Badshah Akbar?
First random thought this morning
The demand for quota in government jobs by mostly prosperous Jat and
Patidar communities necessitates a wider debate on the issue.
By yielding to Jats' demands in Haryana, the government will open
a can of worms. Jats of UP and Rajasthan, Patidars of Gujarat, Marathas of
Maharashtra, Muslims of southern states and UP, et. al., may resort to violence
to press their long pending demands for quota in jobs.
The easiest way to my mind is to widen the list of reserved
categories to include all the communities which want to be included in the
category!
Mr. Arun Jaitely, CFO, Government of India
The finance minister is like CFO of a business corporation. His
job is to keep account of the receipts and expenditure of the government;
manage resources necessary for executing the plans approved by the Cabinet;
ensure optimum utilization of available resources; and keep adequate provision
for meeting contingencies.
He is accountable to all the stakeholders, insofar as the
transparency of accounts is concerned. His discretions are however limited to
choosing the sources of revenue needed for executing the plans of the
government.
In specific Indian context, FM has to decide how much resources to
raise from (a) taxation; (b) sale of national assets; and (c) borrowing.
In taxation, a balance has to be maintained between direct and
indirect taxes to keep the incidence of tax just and equitable.
Sale of national assets (mines, airwaves, PSE shares, land etc.)
has to meet the criteria of sustainability, development, transparency,
viability, socio-political expediency; etc. and depends heavily on the current
market conditions.
Borrowing depends on consideration of fiscal discipline, servicing
capacity, and market conditions. Historically, we have borrowed from domestic
lenders only. However, in recent years the role of foreign lenders has been
rising; the exchange rate volatility has therefore become a consideration. The
FRBM Act also guides the extend of borrowing.
The importance, or otherwise, of the annual budget presentation
must be seen within this framework. Although, the attention that is paid to the
annual budget speech has diminished in past decade or so, it still evokes
intense interest from the financial market participants. I feel it has more to
do with the marketing success of business news channels rather than anything
else. A number of TV shows are hosted to propagate an environment of
expectation, hope and fear amongst market participants.
The anticipation, that is sometimes far beyond the realm of
reality, guides the market volatility. The representatives of various interest
groups and lobbyists for pressure groups demand from FM, what he has no
jurisdiction to give. For example, someone asks FM to allocate more money for
infrastructure spending. Whereas, this request should logically be made to the
concerned ministry and departments, which shall make a plan, and get approved
by the cabinet. FM will be obliged to provide resources for a plan approved by
the cabinet. A defiance could see him losing his job.
I believe that it is high time that the development agenda of the
government be completely separated from the budget presentation. Let budget be
an accounting exercise with a reasonable degree of predictability and
transparency.
Let public appraisal of the development agenda be a continuous
process through regular reporting by the concerned departments and ministries.
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