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Long on words, short on action

Prof Shubhashis Gangopadhyay

The Budget is long on words and short on action.

Like the government, it is all talk. The crucial issue of fiscal management has not been addressed and all taxes have been raised. Industry has been given protection without any vision on infrastructure.

I do not think the FM will be able to contain the targeted fiscal deficit. Frankly, no one has, in recorded history, been able to keep within the target. However, everybody tries. For this FM, there was not much thought given to doing this either.

The BSE rally is because Indian industry has been given protection by way of increased customs duties. If the Budget is implemented as planned, rural infrastructure could get a boost. As for anything else, your guess is as good as mine. Also, last year, the government made the same noises on infrastructure. So wait and watch.

There is some criticism that statistics used by the FM are fudged figures, that the government doctors statistics. I don't know.

Economists don't lie. And as for statistics, blame the statisticians, not the discipline. You do not need to specialise in a discipline about lies. By definition, the art of lying cannot be taught.

Some people look askance at inclusion of infotech sector in the calculation of GDP by the Central Statistical Organisation. I feel the GDP should include anything that adds value and infotech certainly does. So it should be included in GDP.

The statistics by definition is an estimate. The question therefore is: how close is the estimate to the real truth? The real issue in India is whether, at least in some cases, we are using statistical techniques or political motives to put out estimates. One can ensure proper use of statistics if it is outside the government.

I feel there must be global standards in statistics. This will allow us to compare ourselves with others. That forces the government to be transparent and puts it in the public domain. This will also prevent the manipulation of statistics because it will be open to scrutiny by everybody.

The Budget has paid a lot of lip service to the human factor. If the decentralisation in rural project implementation is actually realised, it will be great.

The areas of concern now are: fiscal profligacy, increase in tax rate, no steps towards increase in business confidence, a lack of any vision on the second generation of reforms.

I agree with the observation that the most important feature of the Budget is the promise to institute zero-based budgeting from next year and that if the government can deliver on that promise, it would be a revolution.

The proposed fiscal deficit of four per cent next year is very impressive. Too impressive to believe. But the Budget is still protectionist. In fact, one of the reasons why our exports suffer is because it is more profitable to sell at home, thanks to protection.

If exports do not grow, we could have a BoP crisis. On the current Budget, exports will not grow, so the BoP crisis could be real. I don't think the revival of the capital market is on the cards. Please do not believe the Sensex alone will determine the capital market's future.

The purpose of disinvestment is getting the government out of production. It is not important how much money the government makes by disinvesting. Our problem is we always mix up objectives.

Yes, the way Margaret Thatcher once disinvested in England is the way to do it, with a clear one point goal -- privatise. There is a dilemma as to whether the government should disinvest in favour of the Indian masses at huge discounts or to the FIIs through GDRs at a huge premia. I don't care how you disinvest as long as it ends up privatising PSUs.

The kisan credit cards is a good idea. Why should only the elite have access to credit cards?

There is this argument that there is a price for giving up control. Why take less when you can take more? The government needs the money. Right? Believe me, everybody needs money! That's where the problem lies. The government does not generate money but takes yours and mine.

Will the Budget's thrust on rural areas reduce urban influx? Actually, with so much happening in the villages, people will forget the cities who are pampered in any case. It will be good for India.

Regarding derivatives and futures, there are a lot of things that must happen in the capital markets for that day to come. I do not think this government will be able to take us very far in this direction.

Both housing and agriculture are important sectors of the economy. If the Budget proposals work, it will create an economic turnaround. Oh yes, there are good things in the Budget.

Prof Shubhashis Gangopadhyay is an economist at the Indian Statistical Institute, New Delhi

Budget 1999-2000

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