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This article was first published 4 years ago  » Business » 'It was a vision document, not a Budget'

'It was a vision document, not a Budget'

Last updated on: July 11, 2019 09:12 IST
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'Part A of the Budget was like it was written by somebody from the 21st century and Part B was written by somebody from the 19th century.'

IMAGE: Finance Minister Nirmala Sitharaman enters Parliament to present her maiden Budget on July 5, 2019. Photograph: Adnan Abidi/Reuters

Will Modi 2.0's first Budget create employment and make India shine?

"What is your great idea? It is linking Aadhar with PAN! And the great reform of the Budget? 2% tax on withdrawal of cash!" M R Venkatesh, below, chartered accountant and lawyer, tells's Shobha Warrier.

We have spoken about all the Budgets of Arun Jaitley and also the interim Budget presented by Piyush Goyal. How do you compare these with the one presented by Nirmala Sitharaman?

There is a structural problem with the Budget making exercise in India which most of us don't realise.

On one hand, you talk about Chandrayan, artificial intelligence, and mainly about the 21st century.

In the next moment, you talk about toilets, sanitation, water management, etc.

But is it not the reality?

Yes, it is. It is also a problem.

The problem is, if the central government has to talk about bringing water to your toilet, it is a structural problem.

The state government has to do certain jobs, the panchayats have to do certain jobs. You cannot expect the finance minister of the country to clean your toilet or your neighbourhood through the Budget.

We don't discuss the state budgets and there is nothing called a panchayat budget.

The only person who has a link with the central government and the village is a postman and he is not there anymore.

The state government has to do a lot of things, but many of them are faltering to deliver and the panchayats have no muscle to do even the basic job.

So, in a way, the central government is burdened to look at everything and there is a constraint in the Budget.


Is it a new phenomenon?

It is probably because Modi has taken too much on himself like building toilets, making India defecation-free, building roads in the villages, etc.

In the end, our expectations and aspirations have gone up. And there is also a resource crunch.

You take this Budget -- and it should be true for every Budget -- 25 paise goes as interest, approximately another 25 paise goes to salary, wages and pension, and 12 paise on subsidy.

So, we have only 38 paisa for all the other programmes, including Chandrayan to toilet cleaning.

When Nirmala Sitharamanji spoke of Part A of the Budget, she was in effect making promises.

It was a vision document, not a Budget. It was a Budget without numbers, a number-less Budget.

The idea of part A was like it was written by somebody from the 21st century and Part B was written by somebody from the 19th century.

What is your great idea in Part B? It is linking Aadhar with PAN!

And the great reform of the Budget? 2% tax on withdrawal of cash!

All these are probably necessary, but it doesn't mean a finance minister has to talk about these things in the Budget.

Part B should have spoken about divestment of say Rs 5 lakh crore, of settling issues of Air India and BSNL.

If a finance minister is going to talk about any divestment less than Rs 5 lakh crore, it is not going to excite anyone.

You talk about recapitalisation of Rs 70,000 crore for banks, but the money is nowhere to found in the Budget.

Hence, Part A of the Budget is not in sync with Part B of the Budget.

Do you think this dichotomy has been there in all the Modi government Budgets or only in this one?

Modiji has raised the aspirations of the people. Everybody wants everything, and wants it in a jiffy. It is like mothers wanting to deliver babies in three months as if they can't wait for nine months!

Whether it is good or bad, I do not know, but that is the kind of aspiration people have now.

But our delivery mechanism has not changed. For example, we have the same babudom which believes it is still in the Nehruvian Socialist era and works like it is in the British era.

There is no talk about administrative or judicial reforms in the Budget. Even the Economic Survey talks a lot about judicial reforms, but what about the administrative reforms, which is far more important and far more necessary?

Do you think this Budget is more on Socialist lines than reformatory?

Frankly, if you look at all the Budgets of the Modi government, you will see that right-wing economics is still in an embryonic mode. It has not yet evolved.

The government believes there is a rich which is the villain and the bad, and there is a poor, and the problem of the poor can be solved by giving doles by taking money from the rich.

Somebody wrote recently that the Modi government has been taking money from the middle class in a subtle way and distributing it to the poor, without the middle class really knowing about it. Do you think so?

Successive governments since Independence think the biggest mandate of the government in India is redistribution of wealth and not creation of wealth.

This is a standard leftist thinking. That if you have a food problem, you don't grow more food, but open ration shops. The thinking is that ration shops will address the food shortage.

Let us not forget that it requires enormous amount of effort to grow more food, which no government wants to take the responsibility.

It is easy to give Rs 2,000 a month to a farmer than grow more food. This offset is good, but does it solve the basic problem of our farmers?

My view is we have become a 'tax-more' country with many number of yojanas and yojanas are bhojanas (food) for babudom.

Yet, despite all these, poverty alleviation is not happening. It means that the diagnosis is weak, the prescription weaker still.

Why do you think the government prefers redistribution to creation?

You need more effort to create wealth. On the other hand, redistribution is the easy way out.

Creation of wealth is not by changing the leather suitcase into a red cloth, we would come out of the colonial mindset. It requires sustained hard work for at least 30 years.

Let me amplify. Our population is four times that of America, but our landmass is one-fourth of America. That means, our population is 16 times more dense than in America. So, land is very precious here.

But for five months a year, much of our agricultural farms remain fallow as there is no water.

Imagine the most precious thing in this country is farm land and five months in a year, it is kept unused.

We are a country with such a long coastline. Why can't we make use of sea water and farm and not depend on the monsoon alone?

That is the second part.

The first part is to preserve rain water by cleaning, repairing, restoring and rejuvenating our water bodies.

Rejuvenation requires 30 years of hard work.

The problem is nobody wants to think of a 30-year period. We want everything in one quarter.

The biggest problem for this government will be what will happen in the Maharashtra election, Jharkhand election, Haryana election later this year? So, nobody wants to look at anything with a long-term perspective.

Prime Minister Modi talks of making India a $5 trillion economy by 2024. The Economic Survey says we need 8% growth per year to achieve that, but we are growing below 6% now.
Do you think there is something in the Budget that can spur 8% growth in the economy?

If you want to make a $3 trillion economy into a $5 trillion economy, you can do it today itself by appreciating the rupee! It is not a big deal.

The Economic Survey said we would now go into an investment mode. India was always consumption driven and not investment driven.

It is like, we have two gates, one plane and 400 people trying to board the plane. As passengers increased, we increased our airport capacities. The Chinese model was to have 10 gates, 25 planes and 400 people.

India now wants to move towards the investment mode like China was in the 1990s and other Asian countries.

When China did it, there was a wave of globalisation, there was (US president) Clinton in the US who did not mind buying goods from China and consuming it in the US.

Today, that model is no longer workable. Trump does not want any goods from China to arrive in America.

We want to try this old model now. Whether it will hold through and whether it will be a success, I do not know.

But for sure, today the export driven, investment model is on the decline. We did not use this model when it was on the upward swing.

My view is that we have to rework on many things. The most important is determining the rupee rate.

When huge amount of dollars flows in, the rupee will appreciate.

An appreciated rupee will not allow export of goods as exports require a lower rate for the rupee. So, you will be caught in a dilemma.

When the dollar comes in, the rupee goes up. When the rupee goes up, exports goes down. Then, you will create a situation like what happened in 1998 in Asia.

When the bubble bursts, you will have a problem. That risk is always there.

It is not that it will happen in India, but that risk is always there.

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