We never celebrated Valentine’s Day growing up. But that doesn’t mean our Februaries were fallow. Because we always had the Union Budget.
A little background. My father is (was, he is retired as of March 1) a professor of Economics at IIMC and my mother is a Masters in Economics from the University of Rochester. Thus watching the budget was a family ritual—-Baba would be taking down notes, Ma would be engrossed in the proceedings while I counted the seconds as to when this torture would end.
Its not that I did not like the Budget—-but that was only because following the Budget, Baba would be asked by newspapers for analytical articles and then there was the occasional television/radio interview where Baba would explain to the laymen the inner workings of the government’s fiscal policy in the same gentle tone that he used to teach me. Except that he did not threaten to stop explaining when the other panelists disagreed. He almost always did that with me. Of course to be fair to Baba, the panelists did not throw temper tantrums.
Coming back to the main point, I personally never understood the Budget process or why the entire nation should go ga-ga over it. It always seemed to me to be a kind of a socialistic hangover (like the Five Year Plans) where the assumption was that national economy was guided more by government policy (i.e. its system of tariffs) and less by the market. Of course this opinion could be because of my naivetÃ© in economics—I never studied it—only smelt the tomes of Samuelson, Jones, Mckenzie et al as they sat on the bookshelves near the TV.
Also each Budget to me sounded just like the one before. The reactions to it were also unfailingly similar—-the ruling party would call it a “dream budget”, ” a budget for the common man” while the opposition would call it “anti-people”. The Communists always dubbed it as “written by the World Bank”—even when they were nominally supporting the government. One big-name politician-economist-pressman reportedly had a template for his budget-analysis he used every year: half of it would be “pre-filled” depending on which government was in power.
The biggest mystery however were the articles on which tariffs were imposed/removed each year. Let’s see whats cheaper this year. Pasta. Now why would “pasta” need to be made cheaper?
Okay issue solved. Sonia Gandhi, India’s de-facto ruler, made some phone calls.
Actually I understand why some articles have tariffs reduced—lobbies greasing appropriate palms. Which is why seemingly random articles are selected—following no apparent rhyme or reason. There was the case in the 80s when a company with extensive “links” in the government got import duties waived on a very specific kind of machinery for a few days, brought in their equipment , after which the government again clamped the old duty so as to prevent its competitors from availing of the same advantage.
So the lowering of duties I understand. But what about the articles that will cost more? Do their selection follow any logic?
Sometimes it does. For instance, the government increases tariff on Internet telephony even though calling India is way too expensive from US even with Internet telephony compared to say China. The reason is simple: it wants to protect its bloated telecom companies by levying surcharges on internet telephony.But some things—-I don’t understand where they come from.
For instance, why does “Henna powder” cost more this year? Which demented mind in the ministry thought…hmmm which goods can be taxed more…let’s see let’s see………aha…Henna powder. Was it because he was dissatisfied with the Henna he was using and decided “screw the industry”.
Could it be that a roadside Romeo, who works in the Finance Ministry, got beaten up by a gallant, old gentleman with his walking stick? For which he retaliated by increased tariffs on walking sticks. Yes. Walking sticks are going to cost more this year.
A few years ago, when the government levied a tariff on zari (the sparking thing on the lining of a sari)—-was it because of an official’s disgust with Shefali Zariwala’s thong show in “Kaanta Laga”? Was it the same reason why tariffs on hosiery also went up that year?
Or are the folks at the FM more benign—they just have a million chits with names of products on them, throw them into a gigantic hat and get Ram Singh, the official Parliamentary monkey to choose winners (losers in this case) ?
I never asked Baba these questions. Maybe it’s time I did.
Happy Retirement, Baba. Many more happy budgets to you.
I am sure you are proud of your son’s understanding of economics.