Budget 2014-2015: Introduction

For any country, budget is an important vision document and for newly elected government perhaps the most important tool in hand to keep its people’s hopes and expectations sustained for longer time. The present day government with the help of a promising but deliverable budget can keep its own as well as its people’s morale high. Our finance minister is expected to present budget on 10^th July 2014. So to keep the morale of India at higher level he must take of few issues as inflation, food inflation, growth, fiscal deficit, employment and skill building, investment by corporate, manufacturing, agriculture, infrastructure, taxes, subsidies and social security programs and free trade agreements etc.

Government can use tax and expenditure policy to address cyclical issues such as food inflation and low industrial and job growth. For example, government as short term tactical decision can cut import duties on food but raise them on manufactured consumer goods; give tax credits and interest rate subvention for domestic entrepreneurs, promoting MSMEs, encouraging self help groups to establish micro and small industries across the nation, establishing small clusters for MSMEs, building cold storages; re-look FTAs. With the help of these, government can improve the overall economic position of the country. Also at the same time government must aim to increase private and public investment (PPP model) in different sectors (mainly infrastructure) through temporary tax credits.

Government has an opportunity to show to its people that it is dedicated to people of India and will do all required for the betterment of country on all sectors and budget can be used indicate this. If government makes deliverable promises, it can easily achieve those goals (if intends to).

In next few post I will discuss different Issues mentioned above in detail.

The Big Brand of Secularism

Voters in this country in this season of elections are very confused. Basically they have been entrusted to decide as who is secular and who is communal. Precisely, the main task is to decide who is communal. However secularism has always been a funning subject in our country. It has been so funny that even comedy shows would fail to entertain the public as this concept can do! 

At present there are three big brands in market of secularism and communal-ism; namely Rahula Gandhi, Mulayam Singh and Narendra Modi. The pioneer brand these days is Mr. Rahul Gandhi and he is very much worried about influence of ISI on Muslim youth of Muzzfarnagar and he finds RSS and BJP to be the reason for the same. 

NOTA Can Never be a Right Option

These days, intellectuals are so fond of None of the Above (NOTA). They are praising it as panacea of all the problems of Indian political system. NOTA is being said to be an effective tool in the hands of common man of the country to find the solution to non-performing governments and public representatives. But as a citizen of this country, I have different opinion altogether. It is a negative idea itself for a democracy and any democracy cannot afford to be empowered on the foundations of negative ideas. There is need for affirmative ideas and actions to make the government and public representatives more responsive towards people.

Special Court for Women and Children

The way crime against women and children are on rise, time has come that we must need a special court and legal system for women and children which can fast track such cases. Only fast and tough stances can bring changes in our society. And it should be turned into reality else it will be too late. 

We have centuries’ old legal system which can suit to the fast changing society which is being caused by so any factors. We have to abandon the old one and put completely new system that can fit into the new value system that is shaping our country. The new sets of values and ethics are replacing the old ones and it has to be accepted and acknowledged by our society and the government. At India Gate I am seeing a completely different world and yes, this would be the future. So should be accepted than denied the right place in society. That is the only way we can deal with the new sets of values and ethics.

Great Going Dynamic Democracy

Some people are protesting at India Gate against the law and order situation of the nation, the capital city Delhi, for a right cause and reason but they are being beaten by our Honourable Government. Why? Because these protests don’t suit to the ruling class’s discourse. And that’s great. 

Its great to see and be part of such a living and dynamic democracy! How dare the stupid Indians, the Mango People speak against the modern times Gods! Sorry the real gods!!

People cannot say even the right things to this government. We pay taxes every year to these Gods to be raped, killed and beaten if we demand security or protest when denied our rights. We are moving in the right direction! Are not we?

A Party with Difference and Character

BJP presents itself to the Nation as a 'Party with Difference and Character' and nation does recognize this to some extent. Over time this party has been able to garner this image by its constant efforts. Till now it has also shown great resolve to fight against corruption (in Party Statements) however reality might be different. Fighting against corruption in reality is quite difficult and challenging than that of party statements.

We as a nation appreciate this but at the same time want this to be endorsed as well. So should not Mr. Gadkari, the party president, resign from his to post in response to corruption charges on him by various groups and media house to provide political class with an example (Remember Mr. L.K. Advani resigned when he was charged with corruption in early 90s in Hawala Kand episode)? What do you think?

Cutting Fiscal Deficit has Become Obsession

Managing fiscal deficit seems to be more important for the Finance Minister of India and for this holy cause he increased the effective taxes on common folk than increasing the revenues by expanding economic activities and that too in times of crises where consumer confidence is so low. 

Increasing tax can be an option to manage deficit in an economy that is facing severe deficit problems. But it is dependent upon other macroeconomic indicators and factors. But it is always advisable that government should try to keep tax rate reasonable else that will result into black economy getting bigger with every passing day. And today it does not seems that situation is so worse that it needs to anyhow increase effective tax rate; corporate or personal. 

Are Corruption and Congress synonyms?

It seems, there is some confusion or a new line is being drawn. It is certain that something concrete is taking place visibly or invisibly. In line with the same, these days, if anyone who opposes corruption or do anything against in this country is considered to be opposing Congress. This is how supporters of Congress are behaving these days. And Everyone is amused with one peculiar question, ‘Are Corruption and Congress synonyms?’ 

Cutting Fiscal Deficits will not Help Economies to Revive Economic Activities

There are so much buzz about the fiscal policy and management of fiscal deficit. In some countries fiscal deficit has been addiction. Across the world fiscal deficit has become so popular that countries are taking measures to cut fiscal deficits at any cost. And this is what that is costing the world economy hard during this period of crisis. Fiscal deficit must be controlled and managed but it is not a bad thing at all. If fiscal deficit is used properly and in planned way this can help many countries that are struggling with high fiscal deficit.

There is always a right time for everything. And so in case of fiscal deficit too this is true. Taking measures to cut fiscal deficits at such moment when the whole world is facing economic slowdown and debt crises is not right time for maximum of the economies in the world. Instead the countries must concentrate on increasing economic activities in their respective economies. And with the help of adequate fiscal deficit this can be achieved. But one must insure that the money that is being invested in economy through fiscal deficit is well spent and end up increasing the economic activities. Once the economic activities increase in these economies, the problem of fiscal deficit will be taken care over time as the economies will not need more fiscal support any more when economic cycle is upward.

Many countries like Turkey, China, Brazil and India (shown in the above table) are facing fiscal deficits. All these countries have been trying to check their fiscal position and have ended up decreasing their GDP growth rate. Though the case of Turkey slightly different than other countries in this group. Turkey started tightening the fiscal policy when it was not right time and as result the capital inflows were discouraged leading to no appreciation in real exchange rates against major currencies. By the time Turkey released that it was on wrong course, it was too late to respond. 

Same is the case with India too. In India petty issues of politics and indecision in New Delhi has resulted into lower capital inflow and social and economic turbulence in India led to capital outflow from India. During the same time inflation in Indian economy was very high for more than two years. Also by the same time the government started to respond to the fiscal deficits as it grow to more than 4%. All these led to cooling off the economic activities in economy and as a result a fall in GDP growth rate is now evident. As a result all these factors and events, the Indian Rupee depreciated hugely against all the major currencies of the world. This depreciation is leading to increase in trade deficit and will increase inflation in the economy as India largely depend on exported oil and gas resources. And as a result the deficit may not be lower again for the year and purpose of fiscal tightening will not be served. 

"It is important for every economy to take care of its fiscal position and deficit but for this too there is a right and opportune time to respond. The policy response and management of economy on the basis of the fiscal deficit and with help of fiscal deficit management plans is a very much relative strategy and timing plays much vital role than expected."

So the madness about cutting the fiscal deficits will not help economies to revive economic activities in their respective economies.

Migration not the Sign of Modernization and Development

In developing countries, people flock to capital cities for better opportunities. India is no exception to it. These migrations, sometimes willingly and sometimes unwillingly, have obvious but very simple reasons. There are hardly a few cities that have basic amenities and can offer opportunities that can satisfy the needs and expectation of people. Globalization and flow of information has increased this flow and government has coupled this trend. Also for many consider that migration from villages to cities is the sign of modernization and development both. Though, I am hardly convinced. The reasons I find is the failure of governments to respond to the needs of the people and it is the only government who is to blame. And yes migration to cities is not sign of modernization and development but an escape route.