budget blus

BUDGET 2009 surprises - 2008-2009 variance 145% compared to
2007 ?2008 -15.90%
(Dr. G Balakrishnan)


Adam Smith said ?When National debts have once again accumulated to a certain degree, there is scarce ?a single instance of their having been fairly and completely paid. The liberation of public revenue is, if it has ever been brought about by bankruptcy, sometimes by an avowed one, but always by a real one, though frequently by a pretended payment. The raising of denomination of the coin has been the most usual expedient by which a real public bankruptcy has been disguised under the appearance of a pretended payment.?

Here we see the following - national debt?. accumulated? to a serious level of scarce?. Liberation of public revenue to meet public bankruptcy? (A real one) by frequently pretended payment?rising of denomination of coins (a most expedient method) leading to bankruptcy leading to pretended payment.

This is the new story if variance is to be at 145% now.

How the government will be able to tackle the deficit remains to be seen without raising the denomination of coins/currency with the assistance of RBI?

If that is so it is a real wonder. Now according to current budget document Rs.326515 crores is expected to be the revenue generation but budget estimated expense is expected to be 133287 crores of rupees. There is a tremendous gap

Finance minister has not seen such a big variance in the recent past, which was between ?3.10% to ? 15% between 2005 and 2008.
Indeed it is a yeoman?s task. You need so much funding developments at hand.

Yes he has to ensure credibility of budget exercise. Else the FM will steep the government into deep bankruptcy, which will have deep inflationary trends that will affect ?aam Adhmi? (poor man) very definitely, just because he cannot get essentials of living at affordable price. Then it is leading to stag-flation. To rectify it will take at least a decade by a conservative approach, so that the gap may return to ? 15% by that period.

The variances are due to excess demand from various ministries, under one program or the other.

This is due to estimates of expenses anticipated is actually much higher to revenues generation. Does it mean he will impose taxes to meet the deficit whether that could equal estimates?

If imposes taxes commensurate to estimates, whether is it possible to levy so much multi dimensional multi point taxes? Whether the people are able to pay in these days of excessive consumerism through various means, like credit cards, bank personal loans, refurbishment expenses? It is anybody?s guess it is not possible just because savings are in fact depleted and only debt burden is like albatross on everyone?s shoulder.

If taxing not possible he will have to resort to raising denominations of coins to compatible to estimates by printing/minting currency /coins.

Another alternate is to cut down excessive unaffordable growth expenses. In fact FM is caught between Scylla and Charibdis.

So the ministries will be asked to budget for essentials and ambitious expenses in the name of prodigal spending for unnatural growth.

Yes, there are a lot of expenses which are not very essential spend in this year. The FM has to see all essential commodities are made available at affordable prices to man on the street, to save him from the imminent death due to starvation.

He can afford to exorbitantly charge taxes in non-essentials of living like cars and such other luxuries like palatial houses, business class travels and the like. Only who could afford would go for such luxuries. Yes, rich man has become richer and wealthy has become me filthily rich in the last about a decade. Further whether he could meet all the needed revenue. Again it is a billion dollar question.

Yes, he has to weaken Indian rupee to dollar at least by 50%, so too with other General currencies like Euros, UK pound and the like strong currencies. If done, imports will become very dearly costly unless commensurate exports are mooted. Yes, there is world competition in pricing in usual commodities and nobody is going to buy your exorbitant priced products.

Further you have increases already in salaries and wages of government servants thanks to pay commission recommendation. Again you are going to increase Military salaries and wages, so too in other areas too. Overall increases in every other sectors of economy will neutralize these increases.

Thus there will be vicious cycles of increases in salaries of protected work force but how are to address ?aam Adhmi?, a paradox.

Anyway per force you have to prune the expenses if to save the economy. Your hands are tied up on growth expenditure unless you market so called private public partnership and some divestments in PSUs both in union and state levels.

You cannot any longer allow unaffordable houses or flats buildings, to allow people to showoff and they have to deploy their excess monies into productive areas. Else they will also lose their edge in the economy, just because we are inheriting over heated economy. You will work on economies of scale. Wasteful expenses are to be contained.

Mr. FM you have inherited tough situations as previous FM(s) just spent moneys obtained through revenues. You are facing another situation of concessions to salaried employees. You have to continue FBT ? fringe benefit taxes, on all excess salaries paid out.

And yet your hands are highly tied!

If you still do a great budget it, o angels support just a miracle? (Ends)