friends,
there has been much heat and debate on the 2nd budget presented by UPA by both the people , corporates and so called pundits and analysts sitting in newspapers.
here is my take on the budget both as a journalist, corporate consultant and public affairs advisor.
First, dont compare Pranab da's budget with Chidambaram's budget. both were presented under different environment. Chidambaram is boom time and Pranab is bust time.
Second , stock markets nosedived on the first day of Pranab da's budget. Stock markets are not a true indicator of a country's economy. They only show you the trends of hot money , portfoio investments which are prone to capital flight at the slightest economic disturbance. India depends on FDI which is more than 60% and they are tied and cannot be pulled out easily.
Story is stock market dipped 700 points on first day of budget because according to Rakesh Jhunjhunwala, there was no announcement on FDI, no firm statement to tackle recession, securities transation tax was not scrapped, dividend distribution tax was not abolished. Yes could scrapped dividend istribution tax, it has led to unnecessary double taxation for corporates and other players. securities transaction tax certainly cannot be scrpped because it is a major revenue earner for the government judging by the volume of transactions in the stock markets.
Fact, Pranab da could not have made a statement on FDI because, most foreign players are trying to take money out of india to settle debts at home. Only when they are strong at home will they ring back investments into india. so no point in making any forward looking statement or polocy right now.
Dada has clearly said budget is not a one time exercise and that announcements can be made outside also.
The budget has given only marginal reliefs to income tax payers. People expected exemption limit to be ushed to 200,000 . Yes, this was belied. But you cant blame the govt because the entire budgetary exercise was to the appease the rural folk , NREGA, 25 kgs rice programme, rural employment, etc.
Funding for infrastruture at rs 100,000 crore poor, no doubt, because infrastruture needs $200 billion of which power sector alone will suck up a majority portion.
A budget presented at a time of joblessness , recessionary trends, low growth and high fiscal deficit and burgeoning non plan expenditure, cannot make bold statements because there is no economic or federal reserve backing. It has to be cautious and dada made the best budget under the circumstances, as the comedian vadivelu and vivek often say, ESCAPE, he did that with satisfying the rural masses and giving fringe benefits ( fbt was scrapped, surcharge was scrapped) to the people and corporates.
TN Ashok, ex Economics Editor, ex Executive Director , Communications , ALSTOM grup of companies.
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