'Budgets have lost their credibility'

Subodh Bhargav, former president, Confederation of Indian Industry

Year after year Budgets have doled out promises and assurances. The 2002-03 Budget was no different. As always it was a mixed bag of good news and bad -- good being the promises made and bad comes in the guise of real-personal taxes, surcharges and indirect taxes.

The Budget has, however, lost its credibility. There is no accountability. When the recommended implementations do not happen no ministry owns up responsibility.

What they announced in the Budget regarding divestment last year, was implemented on February 5 this year. And the finance minister takes credit for it! I am really surprised.

The Budget sounds positive, in the long term, as it caters to your dreams and expectations. But all this is subject to implementation. And the past track record is so poor. If you take 11 months for the Cabinet to pass a recommendation, where is the time to implement them?

Let us take agricultural machinery, for instance. While its customs duty has been brought down, the components and raw materials for its manufacture continue to be high. What is the point?

The government is committed to lowering customs duty to international standards. The reforms were to bring down manufacturing and transactional costs. None of them have been addressed. We have again gone into peak rate reduction. It is not going to promote employment.

Of course there was a brighter side also. The reiteration of reform linked public funding, small scale industry dereservation -- specially in sectors like auto components, and drugs -- would go a long way in getting some technology, quality and export opportunities.

Then, we have Indian mutual funds investing in foreign securities. However, action and implementation relating to agriculture insurance will have to be seen.

Plans to cut subsidies is another step in the right direction.

But I am disappointed about the fact that implementation of the medium and long-term reforms will require legislative and bureaucratic nod. Past track record says that it has not happened. Rationalisation of customs duty was to come with reforms to enable the Indian industry to become competitive.

The finance minister is banking on agricultural growth. But the huge task to convert surplus food grains into a national asset is going to take a long time.

I also do not see any investment in the infrastructure and manufacturing sector. We need to improve the climate to attract investments.

However, we have to be optimist.

As told to Ramesh Menon

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