Published Editorial

Panel Discussion on the Union Budget 2013-14 expectations

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In a spirited panel discussion moderated by Business Today editor Chaitanya Kalbag (CK), Yashwant Sinha, MP and former finance minister, M. Damodaran, former SEBI chairman, Satya Poddar, Partner, EY, Samiran Chakraborty, Regional Head of Research, Standard Chartered Bank and Nilesh Shah, President, Corporate Finance, Axis Bank, shared their views. Edited excerpts:

Chaitanya Kalbag: All indicators point to a very disturbing situation. Mr Chidamabaram has already pushed in measures that should have been part of the Budget. I think something is afoot.

In a spirited panel discussion moderated by Business Today editor Chaitanya Kalbag (CK), Yashwant Sinha, MP and former finance minister, M. Damodaran, former SEBI chairman, Satya Poddar, Partner, EY, Samiran Chakraborty, Regional Head of Research, Standard Chartered Bank and Nilesh Shah, President, Corporate Finance, Axis Bank, shared their views. Edited excerpts

Yashwant Sinha: Whenever a finance minister sits down to prepare the Budget, there are five or six issues he has to keep in mind. The first is macroeconomic issues: the current macroeconomic issues are the various deficits, inflation which refuses to go away, interest rates as a result of that, and then savings and investment, which will include the flow of foreign funds - FII and FDI.

Now, we discussed this last year, that the last Budget was the last chance Budget of the UPA government because the next Budget would be just before elections, and this year is the last full Budget of the UPA government. Next year would be a vote on account Budget. So, whatever has to be done, has to be done now. Last year's Budget was clearly regressive. We went backwards. And now when the old finance minister or the new finance minister has taken over again (Chidambaram taking over from Pranab Mukherjee), he is trying to reverse everything that Pranab Mukherjee did. So much change does not even occur when governments change.

CK: We talk about the problems of the coalition, but in this case, they are both from the same party.

Sinha: The same party, the same prime minister. The prime minister is as much involved in the Budget exercise personally as perhaps the finance minister. And he is privy to every decision that the finance minister takes. In fact, the Budget speech is taken by the finance minister to the prime minister for a look; the prime minister proofs the Budget speech, only then it goes into print. The only freedom the finance minister enjoys is to insert a quotation... or some poetry.

The finance minister has options, he has very difficult options. I understand, he has reduced the expenditure of the government by over Rs 100,000 crore in this year's Budget. But he has a very difficult task. The starting point has to be control of the fiscal and revenue deficit. Whatever maybe the immediate price that the government has to pay, it is important in the national interest that the government does it. A bitter pill today will lead to better health tomorrow. If we don't do it, then we are going further downhill. That is the starting point. If the FM is able to rein in the fiscal deficit at 5.3 per cent in this year's Budget and 4.6 per cent in next year's Budget, then I will compliment him and say he has made a strong beginning. Austerity will not save us tonnes of money, but will send out the right message.

It appears on the expenditure front in these nine years, the government has followed a very expensive, reckless policy. I am reminded about the comment that Dr I.G. Patel made about the Rajiv Gandhi era that "he has spent as if money didn't matter." This is why fiscal deficit has to be reined in, which will have an impact on inflation.

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