Budget Plus 2.0 - A Post-Budget Analysis

The Indian Institute of Foreign Trade, Kolkata organized the second edition of Post-Budget Analysis - ‘Budget Plus 2.0’. The panelists of the discussion were Mr. Rajib Basu, Associate Director- PricewaterhouseCoopers, Prof. Ranajoy Bhattacharya, Professor of economics at IIFT, Dr. Ajitava Ray Chaudhuri, Professor of Economics at Jadavpur University, Mr. Anjan Kumar Roy, Member ICSI, Anjan Kumar Roy & Co. Company Secretaries, Mr. Basant Kumar Maheshwari, Founder-TheEquityDesk Dot com. The discussion was presided over by Mr. Sanjeev Nandwani, Development Commissioner, FALTA SEZ.

Mr. Nandwani threw the discussion open emphasizing that budgets are a continuous process and who the Finance Minister is, plays a very little role on what the government’s policies are going to be. He pointed out that a major part of the budget’s every year focus is on meeting the 5 year plan targets.

Then, Mr. Nandwani asked the esteemed panel members to offer their opening remarks. Prof. Ranajoy analyzed the budget from an economic perspective. He observed that contrary to the belief that there would be a growth oriented approach by inclusion of economists such as Dr. Raghuram Rajan and the Finance Minister Mr. Chidambram would bring to the table has not occurred and the budget is oxymoronic to the approach paper of the 5 year plan. He deemed the budget to be neither pro-growth nor pro-social reform. Dr. Ajitava, in his analysis, divided the budget into 4 segments. The first, he said, was that the budget has been a continuation of old stories, but cited that there has been a 46 percent increase in the budgetary allocation to the Ministry of Rural Development. Another important point he touched upon was regarding the women banks. In his opinion, empowering the women by leveraging on the existing systems would have been better rather than the new provision for women banks. In his words, the govt. is “for the people, by the people and whoever for…” and this budget has proved to be a signaling mechanism to the masses. Mr. Rajib Basu took a different stance from the two economists and praised the Finance Minister for the work he has done given the constraints of the upcoming elections. In his words, “the budget is a statement and the money is being put into the right sectors” but raised questions on the amount of money allocated to these sectors. He also questioned the implementation of the policies which are announced in the budget and called for setting up of institutions for efficient implementation. Mr. Anjan Kumar Roy said that the budget has something for everyone and was a balance of reform and social sector measures. He said that the problem lay in implementation of such policies and has been so for the past 30 years. Mr. Maheshwari argued that “budgets have a shelf life of 72 hours”. He said that the investors in the stock market pay very little heed to the provisions in the Budget and exclaimed “good companies get around bad budgets and make money for their shareholders, while bad companies do not make money even in good budgets” pointing out that the stock market runs its course irrespective of the budget.

After the opening remarks, the floor was thrown open for discussion and Mr. Nandwani asked the panelists for their remarks on whether the budget was a populist measure or a policy measure and enquired their views regarding particular sectors. The issue of the declining savings rate in India from 36 percent to 30 percent was discussed at length and Mr. Ajitava remarked that the rent-seekers needed to have a leash and India cannot depend on foreign investors all the time. Various other issues such as the Domestic Institutional Investors (DIIs) following the FIIs in the primary markets and the buoyancy of the capital markets were pondered upon. When it came to the issue of disinvestment, Mr. Basant proposed the idea of giving away 200 stocks to every PAN card holder at a discount rather than to LIC as a measure of keeping the investor’s money with them only.

The audience constituting the students of IIFT, Kolkata campus asked pertinent questions regarding liquidity issues arising out of disinvestment, the overshooting of the target of 10000 crores due to the Food Subsidy Bill and the introduction of CTT to discourage people for investing in gold and silver.

The Panel concluded the discussion citing that although the budget touched everybody, it did not focus on any particular sector.