When Finance Minister Pranab Mukherjee gets up from his seat in Parliament and clears his throat and begins presenting the historical Union Budget on 28 February, you can be rest assured that there will be an interesting buzz going across the nation: Yes, we the responsible and literate people of this nation, will still be discussing the result of the crucial India-England encounter of the previous night.
Is cricket is so interesting for many of us in this country? Far from it, most of us find budgets extremely boring. I know this is a stupid, irresponsible comment to make. But, at least, it’s far less insensitive than Manmohan Singh’s repeated response to the galloping food prices. Reacting to the worrying inflation rate, the country’s Prime Minister, who is also a highly decorated economist, said (this is a straight quote): ‘The inflation rate is worrying’.
But this is not the time to flippantly put down the nation’s highest power. This is the occasion to understand the real meaning of economics, that spirit of enterprise, that innate passion for new endeavours, that has seen human beings evolve from being mere wretched cave-dwelling organisms eating raw food to being ones that are able to construct spectacular glass and steel skyscrapers which house cramped apartments that are more wretched than anything cave-dwelling organisms could have seen in their lives. Oh, by the way, modern beings still eat uncooked food: Our pricey dieticians prescribe us that.
So, let’s get cracking. Once again, it is a quick Q and A on economy. The economy aspect will be particularly felt in truth.
Can you trace the evolution of economy?
When you talk of economy, you obviously have to talk of history. Ancient man survived for centuries without economy and financial instruments. As currency and coins were unavailable, all businesses and exchanges had to be carried – this is a fact – through credit cards. Unable to collect any money from the credit card-users, banks devised the strategy that they would charge in perpetuity the succeeding generations and generations and generations. This theory may sound silly. But even this doesn’t come close to explaining why we are being slapped astronomical interest rates by the banks and credit card companies.
Consumer Price Index or Communist Party of India? Economists can’t make up their minds. So they have not taken both seriously, and hence compute inflation out of the WPI, which we will not try to explain here because it was not asked in the question.
Also, how can the FDI be shored up?
The right question to ask is: Why is the FDI flow low? The answer is: Because of the word ‘direct’. How much money can any foreigner carry on himself so that he can directly invest them in any company? At best, he can carry two suitcases, which in turn can carry only a few crores. Investments by this method are naturally very poor. Perhaps it is time to open up the economy to foreigners to make an investment by swiping his credit card. Or better still, FDIs can take the hawala route.
Why is the IMF not in the news so much?
The global daddy of financial institutions, the SBI of international banking, the IMF seems to have gone bust because it did not do, what we experts call, due diligence. In simple every-day parlance, it’s checking whether you have a ration card or not. It parted with money more readily than the emailers from Nigeria. If only the IMF had insisted on getting the ration card of the countries in triplicate and demanded the passport-size photos of the countries, as every bank does it with you and me, there wouldn’t have been any default on payments.
What happened to WTO?
This came down crashing on the fateful day of September 11, 2001 when the Al-qaeda terrorists rammed planes into it. Now, if you think that it was WTC and this is WTO, then you are smart and very intelligent. Happy? Can we now move on to the next question?
How do you explain VAT?
You see it in every bill. And you wonder that you have not bought the item. So you ask the shopkeeper what it is. He looks at you perplexed. Sighing audibly, he says it is a cess. You don’t know what a cess is. So you ask him what a cess is. He sighs even more violently. And says it is a tax. You tell him that goods you bought are already taxed and, anyway, you also pay a service tax. By now, he is confused. So you ask him how is it calculated. He doesn’t answer. Nobody can answer. It is a random figure added to a bill just to add some fun to the otherwise mundane transaction. When the VAT is 69, the fun is truly great.
What’s the Union Budget?
In India, it’s the annual and all-important financial exercise aimed at giving some work to both Swaminathan Anklesaria Aiyar and T N Ninan.
Are they experts in finance and economy?
No, they are masters in Bengali, which is what you need to know most when you have Pranab on podium. As someone rightly said, Pranab speaks Bengali in five different languages.
This seems to be a tricky budget. What’s the way out for Pranab?
Pranab can save his skin by getting Sachin to score a century the previous night.