BUDGET 1999-2000
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BUDGET 98-99
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'Opening Indian stock exchange terminals abroad is not that easy'

Jerry Rao

The devil is always in the detail and add to that the fact that for years now, the "actual" numbers have been so far off from the "budget estimates". I think we need to wait this one out a bit more. Interest rates is an issue -- but it is not clear who can control it.

The Budget did not make news in the USA. I am based in Los Angeles and travel to and from India. It is the state of the Nasdaq and the Internet stocks that are priority number 1 in the USA.

The Budget did not levy any tax on the infotech sector. Good. Infotech exports will continue to boom simply because the underlying economics are solid. India has a competitive advantage, demand is booming around the world. Luckily IT is the least regulated industry in India. Thank God for small mercies!

The long run issue with India IT exports -- luckily not the short one -- is whether the tax-free status of earnings will come under attack in India or overseas under GATT

We make too much of the "Budget" in India -- it is the overall actual implementation of "economic reform" over time that impacts the world.

Opening Indian stock exchange terminals for trading abroad is not that easy beacuse it depends on the laws of the host countries. The key thing is that India has opened up trading -- not an insignificant move -- as any NRI knows trading in Indian stocks is a nightmare -- but this does not solve the problems at the other end

Silicon Valley is interested very minimally in the Indian budget -- that is the truth. We worry too much about government. We also worry too much about an event -- like the Budget -- half the things do not get implemented. We need to track that FIPB was never a problem in software -- but permission for NRIs to invest 100 per cent in companies via the automatic route is definitely better.

On infrastructure, the Budget does not matter. We need to change Land Acquisition Act of 1898 or whatever, amend the Telegraph Act of 1880 or so, reform state electricity boards -- these things cannot be done by the Budget

I don't think the fiscal deficit projections are achievable. No Finance Minister has lived up to his projections -- actuals are always worse. There is a sameness and a continuity in the slowness of reform and an amazing similarity in promises of lower deficits that do not materialise with actual numbers.

Indians expect too much from finance ministers. The broader question is: do we really have consensus on growth as an imperative, market allocation of resources, lower government activity -- deficit being an indicator of that. As an entrepreneur, that is what I need to feel good about.

Ho-hum is not just about this Budget -- it is about the reform process in India sputtering away.

We must be careful on the forex rate projection. Our inflation rates are still too high to ensure stability. I am impressed with the decision to move MRTPC to encourage competition, this is what we need. About the hike in diesel price, I like it but am not clear how this affects oil pool, etc.

Foreign direct investment rarely reacts to annual events right away. We need "basic reform" of antique laws and populist pricing to attract FDI for infrastructure. We need consensus that we want FD -- many MPs / ministers do not want FDI.

Privatisation of aviation, insurance always get stalled, changed, kicked around in political football ground. Now for the good stuff: last year our stability was a contrast to the far east -- but our FDI numbers are too low for a country of our size

I wouldn't sympathise much with the states. Let them charge for electricity, let them reduce stamp duty rates (total revenue will go up), let them get their house in order, and the scandal of PDS which actual subsidises middles classes and corrupt traders

We must fix TELECOM (capital letters mine for emphasis). Calling India from outside is not expensive, calling outside from India is the most expensive in the world. My cheap Internet Service Provider does not have a local number in India. Getting on to the Net from a hotel room is weirdly expensive.

There are no 1-800 numbers in India This is definitely holding back the country. Brain drain is more difficult. We do not have a decent quality of life. Most of our ministers have their kids in the US -- this is existential. Maybe a failure of the Indic civilisation in this age! Sorry to sound pessimistic and pompous, but it does look bleak for now. The US does not seem to care who takes over their country/economy as long as they are talented and win on merit -- that seems to be their strength

Indians, all of us, should lobby as hard as we can to make sure that through Budgets, other legal changes, executive actions, India gets back fast on to the path of economic reform. After 50 years of having no one to blame, our poverty levels are simply unacceptable. We need growth, growth, growth.

Jaithirth (Jerry) Rao was a top executive with Citibank worldwide. He now runs his own company Mphasis

Budget 1999-2000

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