It is either a sign that Indian business is finally approaching maturity or that Indian politics is approaching toothless old age. Even before any form of government emerged at the centre, Confederation of Indian Industry president N Kumar actually plucked up the nerve to say in a public forum the other day what industry has been moaning about in private for months.In case you missed it, Kumar said,``The new government is not going to be supportive, whatever we may believe. It is not going to be friendly or protective, whatever the parties may have said.''Now that's an astonishing feat of bravado from an industry representative, who also has to run industries of his own. Given the notoriously thin skin of our policy makers and administrators and their all-pervasive clout, there is usually no solo, on-the-record criticism of their actions from industry.
Any budget would be greeted with the usual fawning praise, with carefully-worded `reactions' following after a discreet interval.
That's why it came asa surprise to hear Kumar not only say what he did, but go on to egg industry to ``grow without looking to the government for help.'' Unfortunately, he spoilt the effect a bit by then going on to say that an early budget would be the best way for the new government to kick-start economic growth.
Not that he is factually wrong. As things stand today, the budget, or more appropriately, the budget, is the most important event in the economic calendar. Not just the nations, but your fate may hang on how much pressure the finance minister's under. Too bad if you had invested Rs 2,000 crore in a car plant under the assumption that the excise duty on automobiles would be 30 per cent. This could be an election year, there's pressure from the party to do some active `social spending' to shore up tottering votebanks, and therefore several new institutions for `social upliftment' would be created. Which need capital, of course, so bingo- excise duty on automobiles is suddenly 70 per cent and all your calculations areout of the window.
What started as a simple presentation of the state of the government's finances, along with a blueprint for matching incomes to outgoes has, over the years, been twisted and changed by successive finance ministers into the definitive statement of medium and long-term economic and monetary policy.
Which is something of an oxymoron, if you are going to do it every twelve months. A year may mean eight generations to the common or garden variety of fruitfly, but it is a mere blink of an eyelid in the history of any nation.
It is ridiculous to introduce drastic changes like a total change in industrial policy, a complete revamp of the exim policy or even putting the country's currency on free float, in the central government's annual budget. The budget covers only the union government's finances -- we happen to be a federation -- and only for one year. By this logic, one could make the rupee fully convertible one year and cancel it the next. Sounds silly? How come nobody's screaming?
Asindustry is somewhat painfully discovering, issues like lowering of import duties, easing investment rules or even changes in the tax structure can have devastating long-term consequences. By mixing these with things like how many new toilets are to be added at airports that year a proper debate on the form, content and implication of long-term policy is vitiated. It is high time the business of business was delinked from the business of the government.
