New Delhi: On 1March, business sections of leading dailies will in all likelihood read, “Finance Minister has extended benefit of MODVAT to capital goods. There is a move to impose countervailing duty on import of capital goods equivalent to excise duty on domestic capital goods. This means that full credit of excise duty paid on domestic capital goods or countervailing duty paid on imported goods will be available at one time”.
Raj Liberhan, director, India Habitat Centre
Exhausted, confused or both! Read on: intelligent common man, or Rs.aam admi’ will have to hold forth on the known and unknown dimensions of Budget 2008-09 at dinner parties, business lunches or while chatting up co-passengers in local trains and chartered buses.
Every year, to the day, this bewildering document is awaited with expectations. It unfailingly postpones miracles, which promise to answer dreams of riches and wealth, so familiar to the common man.
Forecasts, economic outlooks and the country’s future are much debated, analyzed and pronounced from anything that swing between the two extremes of ‘grim’ and ‘hopeful’.
From P3Ps to serious citizens, all voice an opinion on what they want the budget to do for them. The wishlist captures demands and expectations that swing gleefully, from abolition of all taxes to a lowering of them, at different levels.
Yet, when the FM unlocks the Pandora’s box, there are surprises. Every industrialist worth his or her salt rises to the occasion and showers praise on the annual dream of progress and growth.
Business houses, industrial houses and fellow party men generously score a perfect ten for the FM. On the flip side are equally inane reactions. The leftists label it as being an anti-people budget. The opposition pronounces it Rs.inflationary’, backing it with concerns on how the cost of living will, post budget, become dearer. While all this conforms to a pattern that is familiar, it is seems irrelevant, for none of it will really change. Everyone says their piece and moves on. The reality is that taxes and duties stay.
Maybe we should just forget countervailing duties, be they equivalent to excise duties or not, since their relevance is only to a small, super rich businessmen’s club. Maybe we can find something more friendly in the reporting of the budget in other non-business publications that do not make a simple budget look like gobbldeygook and double-dutch.
So try this for size: “In his fourth consecutive budget, the FM went a step further in exchange rates liberalization by introducing convertibility of the rupee for all current business transactions. In the last budget, he introduced full convertibility of the rupee on trade account”.
Now, this is a lot easier on the mind. The revolutionary introduction of convertibility of the rupee sends visions of the rupees that we possess transforming into an equal number of dollars or pounds. Unfortunately not. The rupees we possess continue to do the vanishing trick at the hands of the grocer or landlord. We still see our monthly wad of notes being converted into nothing more than grossly inadequate supplies of the bare necessities of life. Maybe traders can rejoice, but is there anything to cheer the common man?
By any reasonable reckoning, the budget should be a document about finance. How is it that our budgets over the years have been more about politics than finance? Perhaps, that is why it looks likes a work of fiction rather than an authentic account of the state of the country’s finances. Allocations for the good of the people are mind boggling. X thousand crore for education, y thousand crore for healthcare, zee thousand crore for rural welfare and wee thousand crore for doing nothing. When all these add up, they make for a handsome figure. Naturally our hearts get kindled with hope, only till you discover that it is just one-fourth of it that is intended for the purpose. Rest is for middlemen and inefficient bureaucrat who with their vanishing trick deplete these allocations.
Also, these resources do not match the ambitious allocations. Perhaps this is what is fiscal deficit - the monster that keeps growing menacingly. But it will never scare our brave hearted finance managers of the national treasury. They tell us that this deficit is healthy and good for national growth. Perhaps, yes. After all, we are growing – population growth, terrorism growth, corruption growth - its all happening, right there in front of us.
By now, the eyes are considerably weakened by the onslaught of complex and distinctly unfriendly newsprint relaying one promising economic detail after another and we can read no more. The nuances and subtleties, the ever-deferred benefits to the common man, will continue to be debated and discussed as in the past. Some enterprising academics will make profits translating these implications for the benefit of the few. To the majority of commoners, however, the year’s budget will have some good poetry and a lot of Machiavellian economics.
After all, if a public limited company presented such a balance sheet, the shareholders would file a winding up petition; if the government does it, it is for growth and prosperity. We will simplify nothing and tax everything, even if it is our own money we want to withdraw from our own bank’s saving account, is the soul of all governance practice here. Which is why one wonders as to who would remember the last budget? Certainly, not the ones who made it.
Raj Liberhan is director of the India Habitat Centre at New Delhi. Send your reactions to email@example.com