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'Budget - It' by Laymen Brothers (Eye Bunk)   M Scalem IIM Calcutta

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Well, here I am indulging myself with a rather satirical take (views totally individual and not related to anyone/anything) on the select sections of Indian Budget 2005. My alter ego (in italicized parenthesis) who, I must say, is quite cynic in nature along with humble 'I' parading as the laymen next door form the main protagonists. Before I go on and indulge, let me take you in that the following inputs/thought processes are non-techy and more on the next-door layman's ideology. The usual disclaimer applies though, like non-political association, IPR issues and humor. Here goes. Unsolicited Hard Facts (Approx.) first:
- GDP per capita average annual growth rate (1990-2003): 4.0%
- Average annual rate of inflation (1990-2003): 7%
- Percent Indians with no fans (ACs): 75% (98%)
- Percent urban (rural) Indians with no Sanitation: 58% (18%)
- Percent Indians living below Rs. 50 a day (1992-2002): 35%
- And so on…

"India is not a poor country, yet a significant proportion of our people are poor," So said our FM (And so sayeth moi: Absolute such hai! But can anyone really explain the real-onomics of that poor Indian and what drives him perennially towards it? So many promises each year but that Mr. 'Sharma' next door is still cursing the system…). Well a helping hand no doubt with this year's budget emphasis on that 'common man'! And yet: SO MUCH MORE to be done…

A budget outlay of INR 514344 Crores, with approximately INR 11000 Crores towards the National Rural Employment Guarantee Scheme, a promised National Rural Health Mission and a planned Rural Electricity Distribution Network, ensures in print that at least the 75% Indians are given their due importance (DING: About a third of the grants does not reach the intended target. Remember the famous quote?). Against the Indian tele-density of 88 phones per 1000 (Even Malaysia boasts of 624), Internet reach of 2 % (Ahem, Its approx 7% in neighbor China), 84 TVs per 1000 (Brazil. 350. Resting my case), the necessary enabling of IT and Telecom industry coupled with a cut in the peak duty from 20% to 15% of Capital Goods would ensure that import competition would increase leading to an overall marginalization of cost structures. A peak import duty decrease on consumer durables, viz., CTVs, ACs, etc coupled with the increased disposable income of Indian consumers ensures that it is going to be a demand driven sector (Well thank God for that!). A cut in peak customs duty on aluminum could result in lowering the costs of auto OEMs thereby ensuring profits for them and lower cots for us (While I enjoy the dreams of a spanking Benz, a dampner: Increased excise duty on steel from 12% to 16% might lead to some repercussions in the real-estate industry). An increase in the deductions (80C) is a happy bit of news for housing finance including the proposed amendment of the Banking regulation act which allows Banks to issue preference shares, remove the floor and caps on SLR/CRR requirements (Well, Good for you Mr. Economist. But please let that other person who is solely dependent on Fix Deposits live, multiplier effect or not. The interest rates have further gone down and threatening to go further south). An additional excise duty on cigarettes' industry would ensure that the health industry rejoices, but to what results for is it not the funding from the former that goes into the latter? (Hallelujah! For I am a non-smoker and yes the name of the situation is Catch 22). VAT is a very welcome initiative with respect to transparency and removal of middlemen (Backdrop: Typical odd middle class Indian still believes that it would end up in increased prices what with the political hulla-gulla. But surely this is a very socio-economic gesture as is evident by the official whitepaper details)

With a current unemployment threatening to touch 10% against 3.5% of Malaysia, the increased emphasis on poverty and Unemployment in this budget is a welcome gesture (Long live the common man to see the gesture turn into reality). With a tax-GDP ratio of approx 10% (as against China's 17%), personal tax slab of approx 10% (against 2% of Malaysia), corporate tax slab of 34% (against Russia's 13%), corporates are indeed going to be the drivers of economy (succulent bunch as ever. Drooling over dreams of having system like that of Dubai's Trade Free Zone with no taxes, eh? Well, keep dreaming!) However controversies and their correlation with budget goes on still, with this time's 30% fringe benefit tax that the employers are quoting as an impending horror (for me employee: YIPPIE!). However, in my personal opinion the ever-so-important issue of Disaster Management could be looked into great deal, as this is one area, which requires immense facilitations with the government of India continually trying to address the issue by greater facilitations. Viva la Indian!

References: Related News, text and analyses

Email: scalem@iimcal.ac.in