See more fiscal steps post Interim Budget: Experts

Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

This week's interim Budget was awaited with great expectations but initially felt like a let down and now perhaps seems more like contradiction and confusion. Now, the question arises has the government tied itself in knots? How serious is the economic crisis facing the country and what does the future look like?

 

Kapil Sibal, Minister of Science & Technology, is of the view that there is enough room for stimulus to be provided in terms of the Budget.

 

NK Singh, Former Member, Planning Commission, believes that having presented the interim Budget, there is an increasing recognition that the stimulus one and stimulus two have not had the kind of beneficial multiplier effect for which they were designed. Therefore, much more is needed to be done and this is really some kind of an attempt to really crawl back to what should have been done initially itself while presenting the interim Budget, he added.

 

Amit Mitra, Secretary General, FICCI, said theory suggests that stimulus one time does not sustain a multiplier and economists agree that you have to stimulate number of times. So it is basically following what theory suggests one should do.

 

TN Ninan, Editor, Business Standard stated that there is a limit beyond which the government cannot borrow and spend unless the RBI does something first. It could be that they were talking about this in a disjointed way and therefore gave a very confusing picture of what they were about, he added.

 

Surjit Bhalla, Chairman, Oxus Investments, feels that throughout this crisis, this government has acted in a very shockingly surprising fashion. "First it was that they clouded themselves or protected themselves under an umbrella that the RBI is an autonomous institution. We believe in the independence of the RBI, we cannot tell them what to do - something that no country in the world has ever even attempted to come to approximate that. Everywhere in the world, everybody is coordinating - the finance ministries and the central banks are doing this together."

 

Here is a verbatim transcript of the exclusive interview with Kapil Sibal, NK Singh, Amit Mitra, TN Ninan and Surjit Bhalla on CNBC-TV18. Also watch the accompanying video.

 

Q: On Monday when he presented the interim Budget, the Finance Minister said that constitutional propitiatory did not permit him to announce a further stimulus for the economy. But on Thursday speaking in the Rajya Sabha, he said that was precisely what he could do when he replies to the Budget debate in Parliament. So in three-days flat it looks to many people as if the Finance Minister is not only contradicted himself but done a U-turn?

 

Sibal: I think what he meant was that constitutional propriety did not allow him to give any tax concessions because once tax concessions are given, they become an act and it is very difficult then for any new Finance Minister when the new government is formed to change that. But otherwise in terms of the Budget, there is enough room out there for stimulus to be provided.

 

Continued on next page.....