With no changes in tax rates but higher spending toward social sector projects, Minister for External Affairs Pranab Mukherjee Monday tabled a Rs.952,231 crore (Rs.9.52 trillion/$190.6 billion) interim budget for 2009-10 that chose to give fiscal prudence a miss during “extraordinary economic circumstances”. MSN
This is an interim budget and a vote of account, a political speech, an attempt to gain free airtime to woo the voters and promote the party in the next general election
What matters most i think is the broader policy direction or the bigger picture the Party in Power and its allys ie Congress and the UPA are hinting of taking this nation and it doesnt look quite so good.
The markets just gave their verdict! A big Thumbs down! Poof Rs 1 trillion vanished on Budget day.
The last year saw an unprecedented boom in the markets worldwide, lots of new indirect taxes, a beaming fm, confident of double digit gdp growth rate, record breaking tax collections and fii investment, a bubble in the commodities, property and stock markets and massive spending by the govt, in terms of doles, loan waivers and off budget items like subsidy and oil bonds . The Yuvraj spoke…
Wonder why he talked about the failure of our family planning program, during the nukular (nuclear) debate… what do u think ?
Laloo the Rail Minister of Bihar entertained us with wonderful english during the rail budget..
As the calendars changed the big boom went bust Satyam pulled a Maytas and the Andra Govt attempted a coverup and all the dreams came a crashing. People commented that this is the worst recession comparable in some aspects to the Great Depression of 30s.
We also saw little or no reform governance or liberalization, a tug of war, a vote of no confidence with its customary bundles of cash and change of alliance from the Communists to the Samajwadis, most appreciated by the okkur pardesh Cm and the bade bahi of bollywood(whose tax problems vanished in thin air)…
I dont need to remind u of the regular terror attacks …
The policy approach and statements by the matriarch of Congress reminded us of the emergency and its declarer, as reforms took a back seat and the Oil Psus bled, the Psu Banks got diktats, to populist measures like the infamous loan waivers and gas shortages and general price rise in daily essentials. There is no strong impetus on education or infrastructure and Nregs is not doing anything to build permanent infrastructure…The NHDP is dead .. Read UPA fails to finish a single highway project. There is lack of accountability that too directly from the PMO. Read PMO U-turn on RTI, won’t reveal ministers’ assets – Express India
It also saw our figure fudging, uber confident ex fm Mr Chidambaram , who was recently shifted to the home ministry, still holding on to his targets, or behave like an ostrich as overzealous targets in terms of tax collections, gdp growth rates, frbm were revised downwards and fiscal deficit mounted . He had said FII inflows aren’t hot money, but circumstance proved him wrong as Fiis pulled out a massive amts of money to fill those massive holes in their balance sheets.
The Rupee has fluctuated wildly during the last fiscal yr, showing a devaluation of 19% against the falling dollar by yr end, the worst performance since 91, busting the myth that its all because of the international recessionary trends..
Credit rating agencies are not amused , and are hinting on an impending downgrade in ratings. Standard and Poor’s rates Asia’s third-biggest economy’s local currency rating at “BBB – minus”, or the lowest investment-grade level, with a stable outlook. Fitch has a similar rating but with a negative outlook while Moody’s pegs it at one notch lower at speculative grade.
The markets have crashed from the mighty highs and people who invested during the peaks have conservatively lost at least 40% of their capital in most equity investments.
Finally the Pm/FM has a unique legacy he is leaving us with. The affinity to number 10. He takes instructions from 10 janpath, he took the hot seat of the FM during desperate times when whe had a huge bop crises and deficit was over 10%, ushering in reform and liberalization, not by choice but due to desperation. He leaves us in a similar or worse off situation with the overall deficit of well over 10%.
Difficult times still lie ahead, and the kind of spending envisaged in this vote on account does not auger well for the nation, especially if it is to be funded by excessive govt borrowing. The RBI chief, who is ex Finance ministry is dangling the OMO carrot as he is running out of options, and demand for govt debt is falling.