Delhi Diary/By A K B Krishnan
The Narendra Modi government’s first full-year budget has brought out political reactions on expected lines. The right-of-centre BJP and its allies have hailed it as path-breaking while those on the other side of the spectrum - the communists, the socialists and the Congress - have called it pro-corporate and anti-poor.
The truth, perhaps, lies somewhere in between and much like the pudding, the proof of any budget is not in the promise it holds but in the reality check when the year comes full circle. For, even if all of what Finance Minister Arun Jaitley promised gets implemented, you still have to see what is on ground at the end of the year to actually give the final verdict. For example, how many people/families get covered under the new Rs200,000 insurance scheme at an annual premium of Rs12 for accidental deaths.
However, if one were to go by the headlines the morning after budget day, Jaitley is a winner all the way. Here’s a sampling: “It Isn’t Big, But it’s Full of Bang” (The Economic Times), “Jaitley lights growth fuse” (Hindustan Times), “Make it, India”, (The Times of India). The list goes on.
Of all the contrarians, those from the left, who are tireless in their espousal of causes concerning the poor and the working class, can safely be ignored. One has to only look at what they did for 34 years in West Bengal. As Jaitley himself pointed out during one of his recent speeches in the Rajya Sabha, there are only two frontline states with a revenue deficit and they are not Bihar and Uttar Pradesh but West Bengal and Kerala and “you can see what kind of ideology led to this state of affairs in these two states, especially a state like Kerala which is the best on all other social parameters.”
The corporates, of course, are quite happy. If Infosys boss Vishal Sikka is of the view that “Jaitley has dexterously reinforced the government’s commitment to transform the nation by ease of conducting business,” ICICI Bank chairman Kundapur Vaman Kamath feels that the finance minister “has delivered with a path-breaking reformist effort.”
Even Jaitley’s immediate predecessor Palaniappan Chidambaram had to confine himself to complaining that Jaitley’s opening remarks about how the Congress government had left the economy in a shambles were not called for. Chidambaram also found fault with the devolution of greater economic freedom to the states as Jaitley had hiked the states’ share of divisible federal taxes from 32% to 42%. But this is of a piece with Modi’s stated aim of empowering the states. (It is another matter that the number states ruled by the Congress Party is dwindling by the day and, therefore, the party does not get to have a say in the economic affairs of the country either at the Centre or in the states).
Chidambaram criticises Jailtey for being pro-corporate - and by curious extension anti-poor - and cites the finance minister’s move to reduce corporate tax from 30% to 25% over the next four years as an example. He says the move will cost India a whopping $32bn in taxes. But the former minister fails to mention that Jaitley had qualified this reduction by saying that most corporates enjoy several exemptions under one pretext or the other and this had been leveraged to the fullest extent and also has a tendency to encourage corruption. The tax cuts will depend on the extent of elimination of these exemptions. It is up to Chidambaram and his Congress Party to keep a close watch on what sort exemptions are eliminated and which corporates are the beneficiaries. They should then raise the alarm if they find that discretions are at play in either removing or maintaining the exemptions.
Two other legislations that Jaitley has mooted - jail terms up to 10 years apart from fines and penalties for ‘black’ money hoarders and a stringent bankruptcy law - are certainly not something the corporates, or at least some of them, would have welcomed with both hands, but Chidambaram and others like him would reserve their comments on these.
There was a time when India’s foreign exchange reserves were good enough to last just three days’ import bills. Remittances from non-resident Indians were then seen as manna from heaven. The highest non-taxed interest rates in the world were on offer for deposits and bonds. In short NRIs were the toast of finance ministers for more than a decade in the 1980s and 1990s.
But as the markets opened up and the economy grew exponentially, the NRI lost her exalted position in the annual budgets of successive governments. Finance ministers barely touched upon NRI remittances though it still brings in around $8bn a year.
This year, too, the finance minister did not have anything specific for the NRI but his proposal to float sovereign gold bonds and get banks to provide interest on gold deposits would gladden many an NRI heart. Although jewellery, which accounts for much of NRI gold purchases, is still out of the purview of these measures, pure gold in the form of coins and ingots could soon be deposited with designated banks for specific periods to earn interest. The quantum of interest is still not decided but traders are of the view that anything below 5% would not have the desired result.
Some like HDFC’s Deepak Parekh would still be disappointed because there were no “big bang” reforms. But the last word on budget 2015-16 should go to Harsh Goenka, chairman of RPG Enterprises which is into power generation, IT, infrastructure and tyres. A great, commendable budget, said Goenka, adding, “Jaitley is no Jet Li”!
Rahul goes on ‘sulk leave’
The jokes have been coming thick and fast, one better than the other. On television channels, the print and social media, the party circuit. After all, much of what Rahul Gandhi thinks or does are mirth-provoking. Remember the famous “escape velocity” theory that he propounded to explain the empowerment of lower class Hindus?
A fellow-Keralite called to remind me of the blockbuster Mohan Lal starrer Pattana Pravesham where the protagonist tells his equally jobless associate of how he had plans to take leave and enjoy once he gets a job. Another friend asked how one can go away when one has not arrived in the first place!
The Congress is in a quandary, as it has been for quite some time now, on what to make of its vice-president’s sudden disappearance - for want of a better description - from the scene when his presence was most in need. This was the moment when the party wanted its leader to think on his feet and lead from the front.
The budget session of parliament was about to begin and the understrength opposition had to close ranks and stand up as one man in the Lok Sabha to fight what it sees as Prime Minister Narendra Modi’s attempt to bulldoze his way through with some important but controversial legislation. But then the man who was supposed to lead the charge goes on, what one commentator said tongue in cheek, “sulk leave.”
Well, if you have a political party as your family business, then such things are possible. And unlike other CEOs, you don’t even need to leave a forwarding address. So Rahul “sightings” had been a favourite pastime among Indians most of last week - from the hills of Uttarakhand to Laos to Bangkok to Vienna.
Rahul apparently is sulking because he is not getting his way through in his attempt to restructure the party. He feels there is a lot of deadwood and wants to throw it out. But the so-called deadwood is not all that dead. It is fighting back.
From the reactions that Congress leaders of various vintage have been giving to the media, there is no escaping the fact that two factions have emerged within the party, one calling for status quo ante and the other egging Rahul Gandhi to take over the party reins. The buzz here is that a section of senior leaders have been antagonistic towards Rahul ever since he famously said on national television in September 2013 that the ordinance aimed at negating a Supreme Court order barring convicted lawmakers from contesting elections “should be torn up and thrown away.” The then government headed by Manmohan Singh did indeed throw away the ordinance almost overnight and this did not go down well with these old guards who feared it would disrupt their cosy club cutting across party lines.
Reports suggest that Rahul will move to the top when the All India Congress Committee meets in Bengaluru in March-April. It’s about time too, if you ask me. India’s GOP has been having a torrid time on various election fronts for quite a while now. If Rahul’s takeover can somehow revive the party - and that’s a big ‘IF’, I may add - India would be better off with a stronger and more credible opposition that is the hallmark of a robust democracy.
