STT hike Right idea, bad timing
A little largesse here (read loan waivers), and a little there (tax cuts for the middle-class) add up to a still meaningful revenue deficit. We have come full circle in these four years from the stated emphasis on outcomes to the actual emphasis o...
| N Ramachandran MD & Country head, Morgan Stanley India |
John Meynard Keynes must surely have done a little jig when news of the latest Budget got to him. The Budget itself was dead on arrival, the only death-defying twitch being some good old-fashioned election year populism.
A little largesse here (read loan waivers), and a little there (tax cuts for the middle-class) add up to a still meaningful revenue deficit. We have come full circle in these four years from the stated emphasis on outcomes to the actual emphasis on outlays.
Paradoxically, in the India of today, a complete debt waiver is probably the most effective way of dealing with farmers��� indebtedness.
Poor execution and high frictional costs make any innovative programme like extending debt maturity, swapping debt for real estate equity or reducing the high cost of moneylender debt through subsidised debt programmes almost infeasible.
Capital market participants who expected to put in a full day at the office analysing Budget proposals, went home early.
After two months of being beaten up by markets, few had the energy to argue with the only proposal of consequence the increase in short-term capital gains tax from 10% to 15%.
Right idea, poor timing. Right because a developing country like India should have a clear incentive to invest for the long-term, rather than punt for the short.
Poor timing because it adds (negative) grist to the mill.
For young economists who seek to understand India's sectors, the annual budget speech should be required reading.
Each year there is a magnificent excise tax tweak to the most obscure of industries this year being no exception. Writing paper, packaged coconut water, puffed rice and sterile dressing pads, well you get the point.
Better to let this budget rest in peace. And invent a new process that focuses on making things happen.
A little largesse here (read loan waivers), and a little there (tax cuts for the middle-class) add up to a still meaningful revenue deficit. We have come full circle in these four years from the stated emphasis on outcomes to the actual emphasis on outlays.
Paradoxically, in the India of today, a complete debt waiver is probably the most effective way of dealing with farmers��� indebtedness.
Poor execution and high frictional costs make any innovative programme like extending debt maturity, swapping debt for real estate equity or reducing the high cost of moneylender debt through subsidised debt programmes almost infeasible.
Capital market participants who expected to put in a full day at the office analysing Budget proposals, went home early.
After two months of being beaten up by markets, few had the energy to argue with the only proposal of consequence the increase in short-term capital gains tax from 10% to 15%.
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Right idea, poor timing. Right because a developing country like India should have a clear incentive to invest for the long-term, rather than punt for the short.
Poor timing because it adds (negative) grist to the mill.
For young economists who seek to understand India's sectors, the annual budget speech should be required reading.
Each year there is a magnificent excise tax tweak to the most obscure of industries this year being no exception. Writing paper, packaged coconut water, puffed rice and sterile dressing pads, well you get the point.
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Better to let this budget rest in peace. And invent a new process that focuses on making things happen.
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