The rituals of the annual Indian budget seem more important than its actual substance.
Most budgets in recent years have not really benefitted the economy. The new aspect for the Indian budget is that thanks to the oil bonanza, the Finance Minister is under no stress. He has a huge surplus (lower subsidies) to use.
The rest of the world is under recessionary trends. Even the United States, which till recently enjoyed immunity from the prevailing recessionary trend is now worried about worldwide slowdown and the untimely and hasty increases in interest rates by the US Federal Reserve.
When the rest of the world is on the verge of such a trend, it is puerile to think that India will evade it. It will suffer the prevailing headwinds blowing across the world.
When there is recession everywhere else, India will suffer loss of overseas jobs, overseas remittances and exports. Commodity and oil prices might be low. But in a depressed worldwide market, India cannot export finished goods.
The unfortunate obsessions of Indian Finance ministers in recent years is revenue collection. There is less emphasis on economy management and more emphasis on revenue collection.
This has been the situation for the last 10 years at least. It does not matter who the Finance Minister is, as only the wisdom of officials will prevail.
Ministers actually win or lose elections for their government. Notice how most of the conversation of even the currnt Finance Minister is only about taxes and PAN cards.
Revenues are only a part of economy management. For a country the size of India, there has to be constant growth. India cannot suffer a recessionary trend.
The new popular term in economics is "secular stagnation", brought to the fore by noted contemporary economist Prof Larry Summers. "Secular stagnation" simply means high savings, some inflation and low growth.
It is something to be avoided since once it enters the system, it refuses to leave. Japan is a good example, which is unable to come out of "secular stagnation".
For every Indian, the great worry is serious medical expenses. Instead of announcing all kinds of meaningless concessions, the government should fashion a policy whereby dialysis, treatment of brain diseases, paralytic strokes and some serious cardiac ailments must be nearly free.
The government should announce scholarships and fellowships for all castes to some extent in universities. Right now, the exclusion of poorer upper castes from educational aid, compared with some favoured castes has created a great social chasm. If something is done for all sections, resentment between communities will decline.
I do not give much importance to raising the income tax limit. It is very childish to think that by raising the limit, people gain something. It is the worst kind of cheap cosmetics.
When you say you need a PAN for every gold transaction, even if it fairly small, it only means hidden money does not enter the mainstream. When you create conditions for hidden money to enter the system, automatically the economy gains and taxes increase. The finance minister should wake up and not listen to everything his officials say.
The trimmings in the budget are unimportant. If the Finance Minister reduces the service and other indirect taxes, then this government gains. Otherwise, Indian public has to suffer the consequences of highly educated finance ministers with little common sense. And finally, the Modi government will suffer just as the last UPA government did.
Edited by Joyjeet Das