'This is not an adventurous Budget'
Dr Rajendra Pachauri, a railway engineer and now the head of Tata Energy Research Institute, in an interview with Ramesh Menon said while there was nothing spectacular in the Budget, it was not a bad one either.
Dr Pachauri author of 22 books on economy, energy, conservation and environment is a Padma Bhusan.
Besides being a member of the Prime Minister's Economic Advisory Council, Dr Pachauri is also the vice-chairman of the inter-governmental panel on climatic change and member of the Institute of Global Environmental Strategies.
What do you think of the Budget?
The Budget had no surprises.
Interest rates are low, inflation is under control and agricultural incomes should go up. All of this should contribute to a higher level of investments.
What was, however, missing was a sense of confidence in the economy. If the Budget can restore that, perhaps we shall see a larger level of investments going into every sector of the economy.
Privatisation plans are in the right direction. Targets should be exceeded and India must make use of the momentum.
There is nothing earth shaking. This is not an adventurous budget. But it is also not backward looking.
What is it that you would have wanted to see?
I wish they had taxed agricultural income. I understand there are strong political compulsions not to do but those compulsions will always be there.
You have to bite the bullet someday. In India's rural areas, there are many who are prosperous enough to be able to apy taxes.
Will this Budget improve the investment climate?
Not directly. But it can stimulate demand. Rather than have an impact directly, it can improve consumer confidence.
Why is there a general lack of interest in the divestment process?
There was a general lack of interest. But now there is no reason why privatisation cannot take place much faster.
There will be political hurdles, which in the initial stage can be formidable. But as these have been crossed, whatever comes, as impediments in the future will be much easier to cross.
What is the future of the average investor?
The future of the average investor is linked to the future of the economy.
If the economy reaches a high level of growth, then it obviously provides an attractive set of opportunities for the average investor.
The big question is how soon will growth resume at a satisfactory level?
The indications are that we have turned the corner. In the next few months, we must see growth rates inching upwards.
If that happens, the average investor will also have ample opportunity because the stock market will go up.
There will be fresh investments in several sectors of the economy and there will be opportunities for investments also commensurate with this growth.
Will this Budget instill confidence?
The important thing is that the signals in the Budget are the right ones. Dismantling the subsidies and AMP, and making agriculture more market oriented -- are moves in the right direction.
So, would you label it as a good Budget?
I think it is a good Budget. It is not in any sense a spectacular Budget. No one could have come up with a spectacular Budget at this point of time given the state of the economy.
Besides taxing agriculture income, I would have welcomed some hard decisions like cutting down government expenditure.
The finance minister has cut down some government jobs, but that is too small a number. One could have articulated a plan of action where several redundancies in the government could have been done away with.
It would have created a lot of confidence. It would also have reduced the Budget deficit, which has certainly gone higher than anticipated. So for next year, it is very important to create a situation whereby the Budget deficit is reduced significantly.
Is the Budget losing its relevance?
The Budget is not losing its relevance, but I would say there has been a shift in what is important and what is not important.
What is now important in the Budget is that the government is now clearly on the reform path.
What is not that much important is how much money is allocated for this or that sector.
But the Budget has lot of relevance in proclaiming the intent of the government to go ahead with the reform process. So one cannot say that the Budget has lost its relevance.
What is the likely impact on energy, power and infrastructure sectors?
There will not be any major impact as no interventionist measures have been included in the Budget.
The accelerated power development programme can be used to induce the states to move ahead quickly with reforms.
That is yet to be done and it cannot be achieved by the Budget. It is really for the government to see that the states fall in line and start taking steps for reform.
I am glad that the finance minister is not throwing money into the power sector. It is now for the states to take ahead the reform process.
Has the Budget incorporated objectives related to sustainable development, conservation and the environment?
From the looks of it no.
It does not seem to really address these issues and it is not a green Budget. It does not address sustainable development. Except for the fact that it reduces subsidies which in several cases could be perverse subsidies leading to overuse and exploitation of natural resources.
What is there in this Budget for the common man?
If the agriculture sector is liberated, and the private sector gets into storage and trading of food grains, it will definitely benefit the common man.
Last year, Yashwant Sinha came up with a whole range of recommendations. But it did not get implemented.
I think last year the government chewed more than what they could swallow.
But this year, whatever the government has committed, can certainly be achieved.
This year, there is a sense of realism in the government.
The government looks committed to second generation reforms. One hopes the government sticks to its word.
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