Beyond Budget 2010: The road ahead for India

But the question on rising inflation still remains. Till recently many of us have been talking about economic recovery and how fragile it could have been but suddenly the sentiment has changed and that too dramatically and the focus is now on double digit growth and this Budget is a preamble to that.

A high powered panel led by India's Finance Secretary Ashok Chawla, OP Bhatt, Chairman, SBI; M Damodaran, Former, Chairman, SEBI; Rakesh Mohan, Former Dy Governor, RBI; R Gopalakrishnan, ED, Tata Sons; Sanjay Nayar, CEO, KKR India explained the nuts and bolts of the Budget and the road ahead for India.

Excerpts of the elite panel's discussion:

Gopalakrishnan: I have been asked to speak about the industry point of view. This Budget has five features. There is consistency in numbers. We feel it is politically relevant. It is not excessive, it has the right measure and we do recognize that it needs to have a certain amount on that.

It has no bells and whistles. We have got used to rather flowery budgets and without the invocation of the poets and musicians. We don’t seem to have completed the budgets in the past. This one even if it invokes them did so without the fanfare it has accompanied with some other budgets.

But the most important one is that in the past and certainly in the last few years. But perhaps even for longer. It all looks very good, everyone claps and the stock market does whatever it does and when the papers come you find in the fine print somewhere buried into the papers a nasty surprise.

One week is over since the budget happened and I must congratulate the finance secretary here that so far we haven’t found any such nasty surprise, so on the whole a very positive response.

The industry has greatly exercised about the whole issue of stimulus and there were many views expressed which I need not recount and I just want to say in hindsight at the very least my perspective that perhaps the way the stimulus came in our country was very different from any other country's and it didn’t come as one USD 783 billion package or a package to buy up old cars or something like that.

It came between December-January-February or even earlier in October in a few tranches. Some of them put money into people’s hands and some of them accelerated the rate of expenditure and you put money into people’s hands by accelerating the rate in which you had to pay things.

In the last four months the government committed to spend Rs 300,000 crore which was to accelerate a lot of the commitments which were made earlier but this was not actually done and money was put into the hands of people whether its through pay commission or via farm loan waiver it enabled people to consume and features of the excise duty reduction and the Jawaharlal Nehru National Urban Rural Mission etc were very positive.

I think the minister has been wise in not taking a dramatic approach to this whole point. I think the industry is generally satisfied with what has been done as an appropriate reduction in the dosage of medicines. We were told to spend a couple of minutes and looking ahead and weighing off some of the challenges.

The minister has articulated very well and the government is there to enable and we have really been in a mode of transition. It doesn’t happen in one single year but it happens over a period of time.

Industry instead of taking the approach of please advantage or enable me please help me to do this and would go to government, we are now moving to a situation where we say you build the roadway and we will get on our way and that transition has happened over the last ten years.

The FM has actually said so in his budget speech. What we would look to is the actual act of enablement that the government implements which will not happen in one Budget or one year but it’s a very important point in my view when we look ahead.

I would very much like as a citizen to see an attitude of productivity to expenditure. The government must see whether it is getting the proper and better bang for its buck or not and I want to know why like we say our productivity must increase by your asset productivity or your cash flow turnaround which must increase by 5% every year why the government cannot do this and deal with it or whatever the issue of the government requiring to do about it can be a step on the gas.

The second thing is there is a great deal of emphasis in the government on the economic ministry. Even in IAS people seem to have some jobs which are higher profile. I really think the time is coming to shift focus and I am not suggesting one should be more important than the other. But health education, legal issues which those ministries must have a higher profile because that is what is going to clear the roadways and the path for us and the industry cannot operate if you have people who are not healthy.

And the people who are not educated and people who are looking for employment but are no good for employment and if you have a legal system which is in utter state of shambles that it is in today, and it’s a very notable feature.

I am very surprised that nobody has commented on this that in line with the Kelkar Committee and the 13th Finance Commission recommendation. Rs 5,000 crore has been set aside for the overhaul of our legal system. I would like to applaud this action and maybe by the government procedures this is essential that the Finance Commission says they have to table it in the Parliament.

But I think it is one of the outstanding moves and the least commented move because the number of crore of cases and how long it takes in business today when people want to be threatening each other and I think the government has shown resolve to something about it.

The last point I want to make about accelerating growth is please do whatever you can to put money in consumer’s hands because consumer’s don't spend they are not going to get growth, we need for agriculture and the farmer, what Dr. Manmohan Singh did in 1991 for the industry a massive dismantling and we are tinkering around and it’s a very complex subject I recognize.

Infrastructure is spoken for and promoting entrepreneurship, our per capita GDP is the tipping point at USD 3,000 per capita on a PPP basis. We are where America was in 1955 and what happened in the US between 1955 and 1975 is going to happen in the next 20 years. The government or no government but the government can be with it so we will look forward to that.

Next page: Rakesh Mohan Former Dy Governor, RBI's views on India's agenda