Analysing the Budget
Dr. Subramanian Swamy’s article, “ >A framework for recovery and growth ” (March 2), is not convincing for many reasons. In the first place, as the writer asserts, one has to look ahead positively to four more budgets to see any setting in of an economic renaissance in our country. How far the MUDRA Bank will succeed in funding those who are not privileged is to be seen. There are absolutely no concrete steps to contain the parallel economy or even end corruption. The Budget is also silent on the role of external factors that may hamper our estimates. Most important, it has failed to convince the common man, who could be the ultimate loser in this exercise. Moving ahead in education and health care are the primary concerns of the middle class and the poor, but the Budget is quiet about these aspects. India has many advantages that could help it become a booming economy but we lack the political will to move ahead. The performance of the BJP government is no different from that of its predecessor.
C.R. Ananthanarayanan,
Bengaluru
S. Gurumurthy (in “ >Game changers in the Budget, ” March 2) is right in saying that three innovative schemes in the Budget certainly stand out for innovative/visionary thinking. >MUDRA is a path-breaking scheme for the micro-financial sector , which is fund- starved and which resorts to borrowing from unscrupulous lenders at abnormal rates of interest.
The monetisation of gold may not be attractive in the end as many families that own gold in the form of jewellery would shy away from parting with the yellow metal for sentimental reasons. They may also be averse to melting jewellery. Many keep the metal to hoard their parallel money and would be certainly reluctant to make it white. Hence, execution of this scheme also requires a massive awareness drive to get the desired results. The insurance schemes and pension funds are certainly novel ideas and the response would be encouraging.
O.D. Damodaran,
Thrissur
The setting up of MUDRA alone will not solve the problems of SMEs. Banks do run myriad schemes for MSMEs, and there is also a credit guarantee fund called CGTMSE.
What is affecting small industry is not funding or manufacturing but marketing. The objective should be to supplement the ‘Make in India’ concept. Whatever is made in India should be sold in India and throughout the world. The government also has to facilitate the marketing of products, whether in small industries or in agriculture.
Gold monetisation is not only an economic issue but also a sentimental one. Investment in gold is a physical form of savings. Unless the government convinces the public of the viability of alternative forms of investment and brings about a cultural change, there are bound to be challenges to this revolutionary objective.
S. Veeraraghavan,
Madurai
More transparency in systems to make it clear that gold deposits, after a minimum lock-in period, will be allowed to be withdrawn as cash at the prevailing market value of standard gold, an assurance that sovereign gold bonds are backed by gold-holdings and an acceptable reassurance that Indian-made gold coins will contain gold of internationally accepted standard are simple features that should be factored into the gold monetisation scheme to make it successful. Once gold becomes an asset that is comparable to shares, real estate or bank deposits, the abuse of the metal for ‘show off’ value will come down and ‘black gold’ will come to the surface as accounted resources would be more productive.
M.G. Warrier,
Thiruvananthapuram
The most important sector for growth, advancement and modernisation, namely the middle class, has been neglected. While the middle class’s contribution to social and economic progress is not quantifiable, it is the source of aspiration and a generator of savings and wise investment, the repository of knowledge, higher skills and creativity and the sustainers of the knowledge base. It is disappointing that the Finance Minister has ignored this section of society. In my view, raising the taxable minimum income by a further Rs.2 lakh is necessary and will yield enormous dividends.
A.N. Lakshmanan,
Bengaluru
Granted that the Budget contains many >business-friendly features to take forward Narendra Modi’s ‘Make in India’ campaign, one would do well to pay heed to the warnings sounded by RBI Governor Raghuram Rajan, an eminent economist in his own right, that India is different and developing at a different point of time. While China achieved dizzying rates of growth by exclusively focussing on cheap exports to the U.S. and the West, by subsidising exports and keeping its exchange rates artificially low, such a policy is unlikely to work for us given the changed context wherein the U.S. is just recovering from a huge recession and the EU and Japan are in an economic stasis. Nor should we try to encourage manufacturing by substituting imports, as it would stifle competition, making producers inefficient and increasing costs. What we need, according to Mr. Rajan, is the creation of a strong, unified, domestic market and a reduction in transaction costs of buying and selling in the country. One looks forward to the country becoming a single unified market which will include the introduction of a well-designed Goods and Services Tax regime.
M.P. Muralidharan,
Bengaluru
