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February 27, 1999
'This is a pregnant Budget. When it will deliver and what kind of species it will deliver we can't decide right now'
The rhetoric in the Union Budget of 1999 was right. But everything is going to be referred to a committee or commission. It was almost as if this is a pregnant Budget. When it will deliver and what kind of species it will deliver we can't decide right now.
I think this Budget has focused less on somebody frustratedly trying to kick-start the economy. I think the finance minister is trying to say, ''Look there is a blockage in the valves and the engines. Let me clean that up.'' Who knows it [the economy] might start moving. We have always been a wait and watch nation and have always managed to survive. I think that on the first day the first reaction after one hour is too early. I might like to look at the fine print and then hazard a guess as to when the economy will pick up.
There have been a lot of steps in the right direction. The capital markets will react positively. Capital gains have been equalised between non-resident Indians and Indians. Lot of corporate restructuring and reorganising has been facilitated.
The finance minister has focused on the capital markets which is a fuel to the economy. He has focused on the two main links -- rural market demand, which he is trying to prop up, and fuel, in terms of capital market. Over the last few years, ever since liberalisation there is a gradual shift to ensure that the rural demand becomes a prime mover. Rural, if you will, is the tail that wags the dog. It's a tail that wags the dog from the industrial point of view.
So he is focusing on cleaning up all the pipes in two areas of major demand generation. So it may not be as vague or unstructured a Budget as one might think. When you have a coalition government where the clutch and the carburettor belong to different people, you sit down and watch it. So as a finance minister he has learned to look and listen.
I think we are seeing a very subtle redefinition of the word swadeshi. Swadeshi today is not protection. It's making India ready for the twenty-first century. Swadeshi means being proactive, being aggressive. It is saying that we are taking steps to boost our areas of competitive advantage namely the pharmaceuticals and information technology industries. We will make sure rural demand is really strengthened. We will remove transaction cost and stop plaguing Indian business by removing BIFR or MRTP regulation. This is all swadeshi. We will unchain business. Swadeshi is making India a superpower.
What is interesting is that he has given a targeted fiscal deficit. He has said that in a particular period of time we will drop fiscal deficit down to two per cent. It is a good beginning towards more transparency, towards more long-term targets.
There has been a huge focus on the rural areas, which I think is just as important as the emphasis on the capital markets. The emphasis to provide power down to the local self-help groups, if carried out, will be a very strong move in the right direction.
Anand Mahindra is managing director, Mahindra & Mahindra Ltd.
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