BJP/NDA’s R.K. Puram Budget

R.K. Puram is a determinedly downmarket neighbourhood in south-west Delhi. It is chock-a-block with government colonies for middle-level bureaucrats, schooled in a cruel education system that strips young people of hope and ideals, and transformed into cynics who have held the economy to ransom.

These housing settlements are pleasant enough with shady trees and large green spaces. The apartment buildings, however, are a different story. Built by the Central Public Works Department, they are shoddy and ugly; islands of inferior design in an otherwise pleasing environment. Decent homes in the neighbourhood would sell for upward of several crores… but the colonies of R.K. Puram are free of price and value, odious abodes for dyspeptic babus who worship at the altar of mediocrity.

R.K. Puram sprang to mind as I reviewed the Union Budget 2015-16 presented on February 28 to Parliament and the nation by the absolute-majority BJP-led NDA government. In his budget speech, finance minister Arun Jaitley presented us with an economic R.K. Puram, dressed up with rhetoric and intention but tacky, grotesque and dysfunctional in content. Its bottom line: higher taxes, greater government spending and significant tax policy obfuscation to keep everyone guessing.

Not particularly known for his grasp of economics and innocent of a sense of irony, the finance minister said in his budget speech: “It is quite obvious that incremental change is not going to take us anywhere. We have to think in terms of a quantum jump.” This resolute intention apart, the rest of his speech was devoted to what might best be described as bureaucratic tinkering such as raising taxable income deductions, easing resolution of commercial disputes and what have you. All the words, sentences and paragraphs of the speech failed to obscure the reality that it’s a bureaucrat’s budget.

Claiming credit for the introduction of a constitutional amendment to facilitate a nationwide Goods and Services Tax (GST), the finance minister appeared to sweep under the rug his party’s opposition to GST when the Congress-led UPA first proposed it.

Likewise in the debate over the land acquisition Bill, disingenuously protesting against the opposition’s “politics of obstruction”, Jaitley seems to have conveniently forgotten that his party had supported the UPA-sponsored land Bill while opposing everything else including permission to multinational insurance firms to increase equity in joint ventures. During the UPA’s two terms, the disruptions forced by the BJP were frequent, extended and virtually paralysed Parliament. Now the party espouses both proposals.

The finance minister’s innocence of irony was matched by his lack of grace. This was abundantly evident in his ad hominem attack on the previous government, castigating its ten-year tenure as a “scam, scandal and corruption raj”. These are not only the finance minister’s failings; almost no one in his party has the sensibility or moderation required of statesmanship.

To return to the budget proposals, several of them stand out for their potential to hurt the economy.

First, the increase in service tax from 12.23 to 14 percent. Though the increase is less than two percent, its impact on small and medium service businesses — which employ a large percentage of the country’s workforce — is likely to be huge. To deliver its promised achche din (“happy days”), the government needs to provide such businesses access to credit and tax breaks to smooth their cash flow. They are the backbone of the economy, the key to the much-hyped ‘development’ agenda. The higher service tax proposed in the budget will make it progressively harder for service businesses to function. That’s not all: the proposed increase in service tax remains in suspense because the government is yet to issue a notification.

The second damaging proposal is to allow the fiscal deficit to balloon to 3.9 percent of gross domestic product instead of restricting it to 3.6 percent as targeted by the previous government. The finance minister seems to have thrown fiscal rectitude to the winds and has, perhaps unwittingly, endorsed the waste and redundancy that are hallmarks of the bureaucracy. It entails higher government borrowing that will crowd out the private sector investment proposals — a mix of equity and crucial debt component.

Third, the assumptions trumpeted in his speech are at best fantastic. The notion that economic growth will exceed eight percent next year is simply outlandish. So is the minister’s assertion that the global economic situation has turned adverse. On the contrary, as former prime minister Manmohan Singh pointed out, external factors are favourable for India to chart a high-growth orbit once again. The global economy is steadily improving led by the US and Germany and assisted by a stable China. The hurdles are all internal and if this government was serious, the budget could have focused on addressing them. Instead, the finance minister’s speech seems to have been caught between hype and bureaucratic tinkering, a sure sign of imminent policy paralysis.

(An edited version of this post will appear in http://www.educationworld.in, April 9, 2016.)

The RK Puram Budget

RK Puram is a determinedly down-market neighborhood in southwest Delhi. It is chockablock with government colonies for middle-level bureaucrats, schooled in the cruel education system that strips young people of hope and ideals; the cynics who have held the economy to ransom.

These housing settlements are pleasant enough with lots of shady trees and large green spaces. The apartment buildings, however, are a different story: built by the Central Public Works Department, they are shoddy and ugly; islands of bad design in an otherwise nice environment.

RK Puram sprang to mind as I reviewed the 2015 budget of the absolute-majority BJP government. In his budget speech, the finance minister presented us with an economic RK Puram, dressed up in rhetoric and intention but tacky, grotesque and dysfunctional in content. Bottom line: higher taxes, higher government spending and significant tax policy obfuscation to keep everyone guessing.

This budget is especially prone to criticism because the government leadership has mindlessly hyped its sermon of happy days: a new and improved “India Shining” with gleaming highways, bullet trains, smart cities, soaring stock markets, a tsunami of foreign investment, gainful employment and “gili-gili,” a waving wand to banish the reality of blight and deprivation. Instead, as the first major government initiative, not counting all the diplomatic event management, the budget is seriously disappointing.

The finance minister, not particularly known for his grasp of economics and somewhat shorn of a sense of irony, said in his budget speech, “It is quite obvious that incremental change is not going to take us anywhere. We have to think in terms of a quantum jump.” The rest of his speech was devoted to what might best be called bureaucratic tinkering such as raising deductions in taxable income, easing resolution of commercial disputes and what have you. All the words and sentences and paragraphs of the speech could not obscure reality: it was a bureaucrat’s do-nothing budget.

Claiming credit for the introduction of a Constitutional amendment to facilitate a nationwide Goods and Services Tax (GST), the finance minister appeared to sweep under the rug, his party’s opposition to GST when the UPA first proposed it.

His was also the voice that could be heard in the recent Parliamentary debate over the land acquisition bill, proclaiming disingenuously against the Opposition’s “politics of obstruction.” He seemed to forget that his party had supported the UPA-sponsored bill while opposing everything else including the proposal to allow global retail chains to set up operations in India and the one to permit multinational insurance firms to increase stakes in their joint ventures. During the UPA’s two terms, the disruptions forced by the BJP were frequent, extended and virtually paralyzed Parliament.

The finance minister’s lack of a sense of irony was matched only by his lack of grace. This was abundantly evident in his ad hominem attack on the previous government, calling it a “scam, scandal and corruption raj.” These are not just the finance minister’s failings; almost no one in his party has the sensibility or moderation that is required of statesmanship.

To get back to the finance minister’s budget proposals, several of them of them stand out for their potential to hurt the economy:

First, the increase in service tax from 12.23 to 14 percent. Though the increase is less than two percent, its impact on small and medium service businesses is likely to be huge. In its search for “happy days,” the government needs to give such businesses access to credit and tax breaks to smooth their cash flow. They are the key to “development,” the backbone of the economy. The budget proposals will simply make it harder and harder for them to function. That’s not all: the proposed increase in service tax remains in suspense because there has been no notification by the government.

Second, the proposal to allow the fiscal deficit to balloon to 3.9 percent of Gross Domestic Product instead of the restricting it to 3.6 percent targeted by the previous government is troubling. The finance minister seems to have thrown fiscal rectitude to the winds and has, perhaps unwittingly, endorsed the waste and redundancy that are hallmarks of the bureaucracy.

Third, the assumptions trumpeted in his speech are at best fantastic. The notion that economic growth will exceed eight percent next year is simply outlandish. So is the minister’s assertion that the global economic situation has turned adverse. On the contrary, as former Prime Minister Manmohan Singh pointed out, external factors are favorable for India to chart a high-growth orbit once again. The hurdles are all internal and if this government was serious, the budget could have focused on addressing them. Instead, the finance minister’s speech seems to have been caught between hype and bureaucratic tinkering, a sure sign of the policy paralysis to come.

(An edited version of this post will appear in Education World, April 2015.) 

  

BBC Storyville India's Daughter

My Friend, Prakash Desai

Too Precious to Die

Prakash Desai basically knew everything and everyone accepted this…until I came along one cold February evening in 1977. He was  a distant cousin, who staked a claim on me as an annoying older brother; a Nehruvian socialist, who believed in the commanding heights because he hated private enterprise; a member of Baroda’s famed Renaissance Club that had little do with the arts and culture but more inclined to the worldview of Lenin and Stalin. He was as amazing a mass of contradictions as his beloved higher Hinduism he wrote copiously about.

I challenged him on all counts and he patiently heard me out, only to yell at me about my capitalist mindset and, he probably died on January 6, 2015, believing I hated the poor. “Not the poor, Prakash,” I would say to him of an evening in his study or in my garden in Chicago, “but against poverty that your stupid statist system created and thrives on.” He would fly into a rage, “Mr Rajiv Desai, you are in the presence of an advocate of compassion and equity; take your goddamn capitalism and shove it.”

“OK, Prakash,” I would say, “Lighten up. Let’s just have another drink.”

For all of that, he was a bon vivant. In his bar, there were the finest wines, the choicest whiskeys and he mixed a phenomenal vodka martini. Always well dressed, perfectly trimmed beard and thinning hair ever since I knew him, he was charisma personified. He was always Olivier while I was looking at Sean Connery. He was not always but sometimes infuriated when I teased him about taking the boy out of Baroda but never the Baroda out of the boy.

Baroda was where we both went to school ten years apart; he embraced it while I was much more about Bombay, where I grew up and Surat, where I was born. It also happened he was related to me through my father’s family of traditional middle-class Gujarati Nagar Brahmins from Baroda; my Surat connections were wealthy influentials that participated in the freedom movement and had national and international connections. Plus, as I told him, our (Surat) food was French to my paternal family’s (Baroda) food that was Slavic by comparison. “And in any case, Prakash, I’m from Bombay where we were urban sophisticates.”

For 38 years Prakash and I jousted on ideology and lifestyle. He had friends who would create and spread stories about me. He even co-opted not just my wife but also my mother and her sister. “Prakash is right,” my immediate family members would say, “Rajiv is very ‘aristocratic’ in his demeanor.” He also said I was more a Christian than a Hindu. In that sense, he was a Gandhian satyagrahi because he knew how to provoke.

It took me a few years to realize that he was a keen psychiatrist because he analyzed my every response to conclude that I was alienated from my father’s family, from my Nagar Brahmin origin and from the larger Hinduism into which I was born. He also said I embraced Western thinking at a very tender age because of the Theosophists on my mother's side of the family, Surat and Bombay. And therefore married a Goan Christian woman from Ahmedabad. Gujarat.

In my view, he was a phenomenal psychiatrist with an amazing understanding both of the body and the mind. When we were not fighting ideological battles late into the evening, he laid out in crystal-clear terms the sources of my health and conduct on any given issue, personal or professional. He always had not just time but insight…he almost always hit the nail on the head.

I still remember vividly one evening four years ago when my mobile phone rang in the pub at the Delhi Golf Club. I was with friends and excused myself to walk out to the deck. It was Prakash. He told me he was diagnosed with cancer of the tongue. I was benumbed. As I went back to our table, my friends saw there was something wrong. I told them.

Fast forward to January 6 this year: my mobile phone rang; it was my friend Satu, who the world knows as Sam Pitroda. I was at a friend’s place to dinner. I walked out of the room. Satu said two words: “Prakash died.” I said I’d call him back and collapsed into a paroxysm of grief and tears. It was not unexpected, of course but nevertheless it shattered my consciousness. Just as I did four years ago, I walked back in a zombie state.

How can a friendship disappear…just two phone calls?

Prakash, as I began, knew everything…the mind, the body, the spirit. Now he’s gone and all I have from him is a millionth of his knowledge, a micron of his wisdom. What I do have is some understanding of his compassion and his mighty humanity. Everyone should be so lucky…to know Prakash was to get to know yourself and the world.

Farewell, my philosopher king!

Tata Sky Scam

Just recently, one Tata Sky connection went on the blink...the remote stopped operating the set-top box. Their service guy came and in a minute told mw the remote "is broken." He pulled out a new remote and offered to sell it to me for 600 rupees cash. I asked him if it was this was a legitimate transaction. He fled.

Next day, another guy showed with a remote and I accepted it. He said my account would be charged 250 rupees. Next day, same thing happened to aconnection in another room. The old non-HD remote simply stopped working. However, in both cases, I found the set-top box could be operated by my HD remote. I have another non-HD connection in my study with the old remote. I checked it to find it isn't working.

When I complained to Customer Care, I was given the run-around and was left holding the phone for ages.Same ol', same ol'.

What a scam! Deactivate old non-HD remotes and open up new revenue streams. 

How low can an Indian business stoop? When business strategy devolves on fleecing customers, what can a customer say?