Leap Year Budget

This is the time of the year again when newspapers, news channels and all lesser or well known mortals are/would be talking about budget and its possible implications. So, I thought why should I be left behind? Atleast I have a dedicated listener in form of my blog, who listens to whatever crap I write.

Sometime back, I came across an amazing article which talks about a pattern which Indian budgets invariably seem to follow. Whatever the coalition Khichidi (Single party at center is alreay an illusive dream) rules the center, first two years are spent on implementing CMP(Common Minimum Progran) and to a certain extent budgets are liberal. Next two years, budget focuses on mending the goofs of the previous two years and final usually reveals itself as election oriented, populist budget. For the current ruling UPA government, the pattern seem to follow just fine.

First things first, the leap year budget is a populist budget, as expected because election mode is soon going to be switched on by parties across India. But I still wonder what happened to Mr. Manmohan Singh, the man behind the revolutionary reforms of 1990 who dared to go against the conventional and presented the reformist budget in an inward looking India. Why is he hailing this budget as "excellent & Outstanding"? Does he think that India has had enough of reforms? Well to certain extent I can understand the pressure from nagging partners(Left Parties), who are still unsatisfied.

I have few observations and few comments to make on this budget. Thanks for extending the income tax threshold limit to 1.5L from 1.1L, middle class salaried families & bachelors like me are happy. But why promoting discrimination in a secular country like India? I am a proponent of gender equality be it salary, rights, freedom and everything. Why is income tax threshold limit different for fairer and unfairer sexes? It really hurts to see discrimination being promoted in the country.

60,000 crore debt waiver for farmers is a welcome step, but funding is something to watch out for. National Banks are going to writeoff this as bad debt and government is going to provide them with liquidity. Liquidity is probably one of the most abused words in economics, which I have so far failed to understand. Inflation, depression, recession, growth everything seems to converge towards liquidity. I wouldn't be surprised if tomorrow government issues yet another off-budget special bond to cover the banks, like the way it has been shielding Oil companies so far. Another conflicting point here is what about those honest farmers who have paid their debts. Won't they feel cheated? This waiver is an incentive for debt evasion for them.

Indirect tax reduction across various sectors is an appreciated step. This will reinforce the much needed domestic comsumption in these times of gobal downturn. Also investment in infrastructure and education is a good step. Setting up three new IITs and IISc was a much needed step but without addressing the issue of trained faculty, this aint going to succeed.

For me this was yet another budget which didn't have much in store for me or probably I couldn't understand a large part of it. But by first look budget seems a balanced one and Mr. FM has done a good job.

Moolyankan Diversified Fund(MDF), is going to dissect the budget 2008-09 today. This the blog of Moolyankan.