Column

Will a good budget salvage a bad economy or a bad budget ruin a good one? Experts who are proponents of a free market economy — are they any others left in the field? — will argue that it is so on both counts. They will cite the recent example of how government’s stimulus package in the wake of global recession helped Indian markets weather the downturn to support the first part and they will say that bad taxation — and in their view all taxes are bad and even punitive — can ruin a good economy to argue for the second part. There are enough contradictions to support either of them if one believes in a market economy which implies a marginalised government, if not a totally non-existent one, as far as the economy is concerned.

Perhaps this ideal state was in existence in the pre-modern state, which was more or less was a police state in the eyes of enlightened liberals. But in the modern day, the state is expected to do more for the citizens in the economic sphere. It is not just the ordinary citizen who looks to the state for succour. The captains of industry and business leaders too expect the state to do its duty by them. They — those who work the economy — do not ask to be left alone so that they can prosper on their own wit and wisdom alone. They want the government to be proactive in improving their enterprises. That is why the masters of the economy are seen petitioning the finance minister every year at budget time.

Indians are not too bothered about contradictions as long as they are able to get what they want. So, you can find a business tycoon arguing that she needs tax concessions and also argue that government should implement economic reforms — that is, not interfere in the economy. Similarly, free market economists and journalists who believe in the credo are quite vocal that the finance minister should do more economic reforms, not less. At the same time, they do not think that the stimulus package should not be withdrawn as yet. This kind of complicated positioning would bewilder any rational person anywhere in the world. But Indians are blissfully unaware of the inconsistencies in their views. So, the budget is more than a talking point in their worldview.

It is ironical that nearly 20 years into economic reforms we are still excited and worried about what the budget will all be about. Though everyone is convinced that government is bad because it is inefficient and corrupt, no one wants to turn away from it. They love hectoring government on what should be done and what should not be. And there is a burning desire on the part of all these people to influence policy even when they cannot frame it.Some of the brilliant free market economists in India are only too thrilled to find themselves on government panels.

It is really the poor people in the country who are not bothered much about the budget. First, they lack the literary tools to understand the debates. Second, the budget does not have any great impact on their daily lives. The tax concessions do not benefit them. Even those schemes which are ostensibly meant for them do not always reach them. So, the budget remains an esoteric affair as far as the poor are concerned.

The poor need government’s help but they have no way of shaping the budget. They cannot even have a say in the welfare schemes which are meant for them. It is government and the experts who decide what the poor need. The industrialists and traders should be able to look after themselves and who pretend to do so. But it is they who get what they want out of a budget.

India will remain a government-centric economy for a long time, where government professes to address the poor but ends up meeting the demands of the well-to-do. When government and creamy layers succeed in what they do, the poor could be the unintended beneficiaries. The poor are the budget markers though they are not the budget makers.