Finance minister Pranab Mukherjee has a vision—a vision he spelt out clearly in his recent Budget speech. For those of you who might have forgotten the immortal words, this is what he said: “The Union Budget cannot be a mere statement of government accounts. It has to reflect the government’s vision and signal the policies to come in future.” How true, how admirable!
A big part of that vision lies in corrugated boxes and cartons. Realizing the country’s core competence in this vital area of the economy, the government has, in a fine display of courage, seized the golden opportunity. It has—hold your breath—reduced the Central excise duty on corrugated boxes from 8% to 4%. What’s more, it has boldly done the same for corrugated cartons as well.
Those base, degraded manufacturers of uncorrugated boxes and cartons can now eat their hearts out. It serves them right, for their depraved anti-national antics in not corrugating their products. In times to come, we can count on a steady stream of corrugated boxes and cartons being rolled out in ever increasing numbers, adding mightily to our gross domestic product (GDP). Who knows, India could well become the Corrugated Carton Capital of the World. There are some reports, albeit unconfirmed, that the finance minister may get a Corrugated Box Ratna, the highest award given by the corrugated box industry.
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Of course, he knows he cannot rely on corrugated boxes alone to deliver double-digit GDP growth for the country. That is why he has reduced the excise duty on latex rubber thread from 8% to 4%.
Notice that the finance minister has chosen to offer this concession at a time when he has increased excise duty on most products from 8% to 10%. Clearly, reducing the duty on latex rubber thread is part and parcel of a devilishly clever industrial strategy, one aimed at finding niches in which India can specialize.
China may specialize in manufacturing, Korea may focus on shipbuilding, we will do so on corrugated boxes and latex rubber threads. Moreover, notice that threads are used to tie packages. The idea is that while the parts for a machine may be made in South-East Asia, the technology may be from Japan and the product may be assembled in China, the box and the string to tie the box will be made in India. That’s how India will become part of the global supply chain…oops, sorry...supply thread.
India is now known as a country that has successfully made nuclear bombs and spacecraft. It is renowned for its lean manufacturing skills. Unfortunately though, it is still not the Microwave Oven Manufacturer of the World, nor has it attained the status of being the Most Desired Destination for Making Replaceable Kits for Household-type Water Filters (other than those based on reverse osmosis, or RO technology).
This dismal state of affairs needs to be corrected forth-with, which is why the finance minister has reduced the customs duty on magnetrons, one of the key comp-onents of microwave ovens, from 10% to 5% and the excise duty on water filter kits to 4%.
But I’m not sure the finance minister is doing the right thing here—would it not have been better to provide incentives to manufacture magnetrons, too, in India, perhaps through a Mahatma Gandhi Magnetron Manufacturing Yojana, thus ensuring that India becomes the Magnetron Maker to the World, which sounds so much better than Microwave Oven Manufacturer? And is it fair to discriminate against RO technology in this manner? What on earth is RO, anyway? Does it stand for rear orifice, or really old-fashioned, or reverse osmosis? Personally, I dislike rear orifices.
I’d also like to mention a few other pieces of the grand industrial strategy unfolded in the Budget. Compostable polymer has been excluded from customs duty, in order that polymers may after becoming compost be said to have risen, in the words of the poet Tennyson, on the stepping stones of their dead selves to higher things. Reduction in duty on asafoetida and long pepper will buttress our position as the Curry Capital of the World.
But these are small things compared with the pièce de résistance of the Budget, the rescinding of all duties on toy balloons. Balloons form the centrepiece of the finance minister’s economic strategy. As Chacha Pranab has said, they are a source of joy to millions of children and will bring a smile to their mothers’ faces. “No, you can’t have any more dal because it’s too expensive, and no sugar in your milk because we can’t afford it, but here’s a nice red balloon,” is something a mother can always comfort her child with.
I humbly suggest that, for maximum effect, balloons should be distributed to the masses through the public distribution system and the government should pass a Right to Balloons Act. The finance minister was doubtless banking on the infinite wisdom of Winnie the Pooh, who said, “Nobody can be uncheered with a balloon.” It’s a pity he didn’t quote him instead of that old bore Kautilya.
I have a dream, a vision in which every Indian child, nay, every Indian man, woman and child will go marching through the 21st century, ragged and malnourished perhaps, but nevertheless proudly holding aloft a balloon, with a corrugated box bound by rubber latex thread under his arm, while chewing some asafoetida and long pepper.
Manas Chakravarty takes a weekly look at trends and issues in the financial markets. Your comments are welcome at firstname.lastname@example.org