The Indian Budget : Playing for a Draw

The Finance Minister in his press conference said that in the Indian Government has to show that it’s heart is in the right place as well as it’s head. He needs to be congratulated for his heart.

With the great emphasis on the rural and agricultural sector, on education, on micro credit to the agricultural sector, the FM has certainly exposed the kind heart of the Government to the voters. He has it right. In order to sustain the current growth rates, and if India is to become a Global power, it must do so with most of all it’s population as part of it wealth increment. For if we do not, the social pressures on our fragile growth economy will bring us falling down like a pack of cards. History has constantly reminded us of that lesson. So congratulations Mr. Finance Minister.
But the head knows that expressions of the heart must be matched by implementation. That’s where my fears lie. Allocation of funds are the tip of the rapidly melting iceberg. I was disappointed to see no new incisive schemes that suggested how the FM will ensure this allocation will not just lead to a bloated money disbursing scheme, rather than provoking a rural entrepreneurship that becomes as vital as our urban service sector. We can, as the simplest example, build 10,000 new schools. But, Mr Finance Minister, how do we ensure the quality of teaching in those schools ?
Is there one possible ? Yes of course there is. Technology. India is on the forefront of a world surge in the knowledge economy. Lets make it work for our rural sector. I am surprised the the FM refuses to bring Broadband into the purview of primary and essential infrastructure. With every Indian connected to Broadband, we could do wonders for our education and rural empowerment schemes. And give the rural population access to the growth of the Urban Service Sector. So if an Indian software engineer can be part of a global service sector, why not a rural person ? Interactive integration of our people, where information, education and opportunity flows freely and interactively between all, is the key to India’s rise as Super Power. Building interactive Information Highways is key to trade of the future and therefore integrated economic growth.
Now for the Urban sector. Yes. Allowing MF’s to invest more overseas is definitely a confident step in the right direction. But overall, this budget feels a bit like the FM taking a breather. Yes, the Nation of Urban India is doing extremely well. So when we are doing so well, why play for a draw ? Why not drive the advantage into a win ? It seems our Government is so used to problem solving, so used to batting on the backfoot, that it needs to learn how to be aggressive. This is an ever changing world where a sudden oil crisis can substantially change the game. So if the West sneezes, will our Urban growth catch the flu ? Probably. So what should the FM be looking at ? If we are now coming to the forefront of the world’s knowledge economy, how about giving increasing tax breaks to creation of intellectual property owned in India ? How do we encourage the next Microsoft to be an Indian Company, for example ? How do we encourage our youth to create new businesses, rather than become part of a work force that services an uncertain (and economically declining) western world ?
A couple of issues that will be our biggest challenge in the next five years, that I think the FM has not addressed :
We are running out of drinking water. That in itself will bring our economic growth to nothing.
The infrastructures in our cities are crumbling. They are about to burst. I wonder how the urban renewal scheme announced last year is doing ?

4 thoughts on “The Indian Budget : Playing for a Draw

  1. Ideas about urban renewal in India seem to be at odds with ingrained notions of civic pride – not to say it can’t happen – my parents often go on about how clean & tidy Mumbai was under the British – everything starts with an idea, a mental picture – which at the moment is very West facing…
    I find the drinking water issue incredible…maybe your film PAANI will shed light on this…

  2. Can we use ur write-up in or magazine, sir?
    It’s called ‘Punjab Panorama’. It’s non-commercial magazine that is being brought out by a group of friends who have come together to form an organisation ‘Media Artists’. we do lot of activities like lecture series, studies, seminars, musical programmers and theatre. In fqct theatre is our thrust area.
    Thanks and regards
    Jatinder Preet
    Punjab Panorama

  3. Hi
    How have u been sir? After reading this article I am tempted to ask few questions about INFLATION.
    Inflation has come down to 4.03% – 4.13% , is that sustainable?
    ( I dont have the latest data with me as it is supposed to be released in an hour or so. But its not going to change drastically so we can easily discuss the issue on the basis of last week’s report. )
    Do you think it reflects the real picture of price rise as retail prices havnt come down in real sense?
    Should RBI continue with raising interest rates ?
    And the last qestion is ..
    Can I quote ur reply?
    Sincere Regards

  4. kanak, Lets remember that India is still not an integrated economy, and slight rise or falls in interest rates take a long time to affect (say) the price of onions. So all inlation figures, unless seperated into different sectors or sections of the economy are often misleading.
    But if we are talking about the what I called the ‘integrated economy’, in a country growing at the pace we are, is not only inevitable but often a healthy indicator of growth. Non inflation or deflation is usually a sign of an economy in decline. But again this only applies to that part of your economy that is actively taking part in the 8+ % growth.
    In that part of the economy I would say that what we have to watch out for is the rise in the value of the rupee, which higher rates will inevitably lead to. Our manufacturing sector is just recovering, but is still being hit hard by cheap imports from China. Our outsourcing sector and often our IT exports operate on high volume and low margins, so are very sensitive to a change in the rate of the rupee.

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