Wednesday, March 01, 2006

Budget 2006 - my two bits

I am not in the habit of following the budget speech. But there's a first time for everything and I did tune in this year. Mainly because I had to write 500 words on 'what the budget did/ did not do for the youth' for the Financial Express by 5 30 pm, the same evening. Here's what I wrote:

Let us build castles!
- Rashmi Bansal

Listening to the FM's budget speech in full evoked in me a feeling similar to watching the annual Republic Day Parade. Sarva Shiksha Abhiyaan, rural employment, mid-day meal and assorted other schemes named after members of the Gandhi-Nehru family were the first to march past.

I felt like making a trip to the nearest electrified village and doing a jig to the tune of 'thodi si dhool meri, dharti ki meri vatan ki'…If there is a road to reach that village in the first place.

Call me a cynic but this is how most of young India feels when politicians rattle out statistics about 'development'. Seeing is believing and we don't like the dump of a country we see around a few islands of opulence and excellence.

Ironically, the FM made a statement about young people building 'castles in the air'!

But sir, we're glad you used the word 'castle' and not humble jhopdi, or 1 room PWD apartment. We're glad that you approve of young India thinking and dreaming big. So are you.

Leaving aside the 'announcements' on duty cuts and tax tweaks which experts are better placed to analyse, what pleased me were some of the vision statements. Imagine an India where you don't have to stand in line to file a police complaint, get a birth certificate or register as a voter. Where you can demand information from government departments under the Right to Information Act through an online application.

No science fiction, that. The FM plans to bring sarkari services online under a National E-governance plan. A more efficient and accountable government? Now that is something we will thank the FM for long after we've forgotten about cheaper soft drinks and Santros.

Speaking of thanks, students of Mumbai, Madras and Kolkata universities will be pleased with the Rs 50 crores allocated to each institution, in recognition of their completing 150 years. This is great news, except for the fact that the FM wants this money to be used for 'a specified research department or a research programme' when the problems that need to be addressed are far more basic!

And yet, as the minutes tick on, as achievements and proposed achievements parade by, you can't help getting carried away by a sense of pride. This is more just a 'budget', it is a document defining hope.

Because a budget implies 'living within one's means'. To which the young person's answer is I am not satisfied with that. Allow me to grow.

India is now a growth story and there is no looking back. What's more, the Finance Minister ended his speech with the immortal words of Swami Vivekananda, "We reap what we sow. We are the makers of our own fate. … our own destiny." Which is exactly what the young people of this country now believe.

For the underprivileged, the budget must continue to sow opportunities. And for the rest of us, allow us to enjoy the fruits of our own harvest.

There was more I wanted to say but could not due to the word limit. So here goes...

On education: The thrust of the budget outlay in education is towards primary and rural - rightly so. But higher education can't be left to fend for itself.

IISc Bangalore recieved Rs 100 crores in last year's budget towards upgradation and modernisation. This year another well deserved Rs 100 crores went to Punjab Agricultural University, Ludhiana

But what about a comprehensive policy that aims to upgrade all mediocre institutes to excellent ones, and the excellent to outstanding?

And also a quality control mechanism for private education. These are issues which of course need a whole separate forum for debate but if the primary schooling program is successful - imagine how many fold demand for higher education will increase say 10 years from now. And then, universities and colleges can't be set up or upgraded overnight!

On entrepreneurship: The Ministry of Finance has a pretty cool website where you can actually watch a webcast of the FM's speech and access budget speeches from previous years.

If you run a word search through this year's speech you will find the word 'entrepreneur' used no less than 4 times. It was not mentioned even once last year.

This year's speech specifically refers to young people building castles - and the FM says it is 'our job to lay the foundation for those castles'. So we enable you and you go out and create your own future.

Hope this translates to better power, roads, public transport - and other infrastructure which will allow us to be productive, not hassled citizens.

I am intrigued by this statement in particular: Recognize SMEs in the services sector, and treat the small scale enterprises in the services sector on par with the small scale enterprises in the manufacturing sector.

If this means access to credit for entrepreneurs in the service sector it would be a great step forward. The idea of a world of commerce where you don't have plant and machinery to pledge as collateral remains alien to the loan officer in the average PSU bank. And this is a stumbling block for entrepreneurs, young and old alike.

On accountability and follow up: Not to say the FM is lying but achievements like '10,366 villages electrified' are - I hope - published separately and verified by independent agencies.

Lastly, this article in FE raises the pertinent question: Where are yesterday's budget ideas?

Before today’s budget comes up with another list of new schemes for rural India and the environment, it may be worthwhile to look at where we have progressed with regard to some of the big announcements of earlier budgets.

The restoration of water bodies, the launching a horticulture mission, subsidies for micro-irrigation and the launching of a mega bio diesel plan were some of the major initiatives meant to breathe new life into India’s rural economy.

Unfortunately, by the time these schemes made their way through several ministries, it was already December 2005. With the end of the financial year round the corner, there is the usual rush to release money. In terms of actual work, however, there is very little to report.

Hope the media, NGOs and development agencies continue to discuss, debate, push and nag the government every week, every month tio implement its plans and show results for allocations. And not just wake up next year on Feb 27th!


  1. An interesting and thought provoking article rashmi. It is good for the country to realise that it is the youth of this country that is going to take the country forward not someone like our esteemed politicians who are hell bend on wasting country's money.

    For any development, infrastructure, transport and power is important. Unless and until we improve those, we will not be moving forward.

    Does any one really verify the gibberish that is thrown by politicians in the form of data. I am really interested to know where from these data are collected. If they can never be verified, whatever one says is true isn't it?

    With the prices of all commodities rising every year and no substancial salary increase of common man, where from can they squeeze out a comfortable life? Has anything been done to answer these questions.

    I am a software professional. Thankfully, i am paid well to lead a good life. But does that payment extends to someone working in the small scale sector, in cement sector, in manufacture, in engineering...Is any mechanism exist to verify whether the salary earned by a person is in accordance with the industry standards?

    I am sorry for being in a whining mode. But i feel that these things needs to be looked onto. Comments welcome.

  2. let me say this abt SME i have personal experience on this and FM sir seems to do nothing abt it For Eg you will get cranky calls from all and sundry to take PERSONAL loans at varying interest from various banks even they dont ask your salary slip proof of income nothing and dont even ask reason why you need money .. just take it but anything however you flip and say you want not 1 lakh but say 3 lakh byt for upgrading your dad's SME then the tone changes please come and meet manager sumbit project feasiblity report etc etc and still no gurantee .. for the money .... and all time and effort making report goes waste .. the way i tried to overcome this .. is in my family 3 persons took PERSONAL LOANS and believe me no one asked why .. 3 people living under single roof needed PERSONAL LOANS no gurantee nothing .. if i freak out now and dont repay then what...:-)

  3. "But higher education can't be left to fend for itself. "

    Primary and secondary education give far more social returns than higher / professional education.

    Higher education should be liberalized and private players should be allowed to enter. The government should only set up an independent regulatory agency like TRAI for the higher education sector. And yes, FDI should be allowed. Today, people are willing to pay for education. For those who can't, the private sector should offer scholarships to promising candidates. The not-so-promising ones can always get a loan - the banks will only be too happy to advance loans to students of good universities.

    By giving a free rein to the market forces, the quality of education will automatically improve and stupid anomalies will disappear. Didn't you lament a few posts back that an IIM professor actually earns less than a fresh IIM graduate?

  4. @sand_dunes,
    i remember reading it somewhere (i guess it is that famous book "rich dad, poor dad"). here auther mentions same feeling and explains it also. banks want to give you personal loans so that you work for bank now onwards. work for money and pay bank in interests. but lending you for your SME, they are letting you, make money work for you. so they dont lend money for SME.

  5. Thanks for a good article, Rashmi. Demystified the jargon that one has to wade through to get to the actual facts. Interesting points about higher education and entrepreneurship.

  6. Overall FM managed to put up a good show.
    Just hope the economy continues to grow at this pace.

    Read my recent post
    Slaughterhouse Ethics

  7. hmm .. nice account of the budget. I was really impressed by this line of urs --

    "For the underprivileged, the budget must continue to sow opportunities. And for the rest of us, allow us to enjoy the fruits of our own harvest."

  8. Hi Rashmi!
    Excellent commentary on Budget! Very subtle criticism, but apt!
    Regarding grant to Universities, it seems IISc hasn't received 100 crores that it was granted last year. And, I can't vouch when will Madras, Bombay and Calcutta Universities receive their promised grants!! It happens only in India!!
    And, in last budget, there was an allocation of 1000 crores for a Desalination plant in Chennai. Not a single word about that has come yet! Who is responsible? State or Central? What happens to such allocated but not spent money? any ideas Rashmi?

  9. Hey Rashmi....Cool Analysis of a Hot Budget!!I would say it has 25% cynicism,25% skepticism and 50% appreciation and hope.I did not listen to FM's speech as i was snoring( speech wasn't boring...its just that i m BPO employee..nocturnal monsters u know!),but i did go through the exquisite analysis done by Times Of India(TOI) which devoted more than 10 pages to the budget and had reactions from all corners of the nation.Your analysis is a nice one as well...Kudos to you and TOI for that!!!...Overall..the budget can get 7 out of 10....although disappointment for guys who hope to buy a laptop in the near future as it might cost more(I m one of the victims!)..But they say in the US...That was cool Man!!(This goes for Both FM and Rashmi for their respective contributions)

    P.S..Rashmi...I would love to have your experiences on my blog! if u r free...just drop in at

  10. What a whimper of a budget from Chidambaram. Seems like he is braindead...

    Tax ATM usage. What!??
    Wait theres more. Tax credit cards and debit cards further. Nuts !??!!

    Umbrellas to cost more. Packaged food and poultry products to cost less, icecreams to cost less... blah blah

    Its seems like those old oppressive Indira Gandhi, Rajiv Gandhi, VP Singh days budgets, where they decided the prices of little items like soap, detergents, toothbrushes, safety pins etc.

    And last year Chidambaram came up with the funniest harebrained idea .. withdrawal tax. If you withdraw your *own* money from the bank, you will be taxed.. ha haha.. what a loooser ..

  11. really eye opening , this high-profile ministers shld actually know what exactly is happening in deep-roots of our motherland, instead of showing ever-improving stats.

  12. hi!

    you can also add this to his hair brained ideas (from last year's budget): doing away with the standard deduction for the salaried. So now the generally-no-way-out-of-the-tax salaried person is in the same league as a businessman, who has umpteen ways to hide his real income! Also sad to see the industry honchos giving unusually high marks to the FM. why have such surveys in the first place when you know the boot licking industrialist won't dare say a word in earnest, for the fear of IT raids and other such govt retribution, if he publicly critises the FM.

    Sad media..sad commentators....


  13. budgets i guess have lost their relavence currently.gone are the days when people used to assemble to hear luminaries like nani phalkiwala give their take on the budget.the 91 budget was suppossed to be path breaking ..what did the newspapers report on the following say ..nobody told that india was entering a new era ..even now the major reforms are happening, but the budget is no indicator of the real policies and financial condition

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