Whatever way one looks at it, the interim budget, or vote-on-account, proposals would have relevance, provided what the government has in mind. The economy is on a continued slowdown mode and in the current fiscal year 2013/14 is likely to register 4.5 per cent growth at best, if not a little lower. Our expectation from the government in its last leg is to halt the process of decline and pave the way for a turnaround beginning the new fiscal year.
To my mind, we need not look at the budget proposals under the garb of interim budget as a mere statement of revenue and expenditure, nor should it be seen as a mere routine function of resource allocations. There has to be an objective behind it, and needless to say, the objective is to halt the slowdown and prepare grounds for revival.
First, it is crucial for the government to announce certain fiscal stimuli within the framework of the electoral code of conduct. We are aware that electoral considerations would tie the hands of the government to a great extent, but to the extent proposals are meant to revive growth, one would not be violating the code of conduct. Given this, the government should calibrate the proposals in a manner which would change the mood in the economy.
Second, the government can opt for efficient re-allocation of resources towards growth inducing sentiment. What we are expecting is certain feel-good factors to be brought in. In a democracy, elections are a process of transition. Of course, we do have considerable uncertainties ahead, but irrespective of the composition, government is a continuity and let us not be confused on this.
Third, in this context, I feel there is no harm if the interim budget details the broad super-structure of the budgetary framework, not putting the flesh and blood but the bare structure should remain as it is. Whenever the new government comes, it can decide on the flesh and the composition of the budget. Therefore, my expectation from the budget is that at least 75 per cent of the job is initiated and undertaken through the interim budget but as I mentioned earlier, this has to be within the framework of the code of conduct of the Election Commission.
Fourth, henceforth an air of certainty may be allowed to prevail and no such announcement made as might create confusion and instability in the minds of the investors. Let the market behave in its natural course and let nothing disturb the dynamics of the market.
In this position, it is my concern when the Reserve Bank of India (RBI) has to play a very critical role; it is talking of anchoring monetary policy with consumer price index-based inflation. It may be a desirable thing to do but not at this time when we cannot expect any other policy initiative. The so-called anchoring is important but the time is not ripe. It is my personal view that, to the extent possible, the RBI should play the [US] Fed in its own way and figure out how within its limitations it can bring in some monetary stimulus. For the RBI, it is important to keep in mind that inflation is not the real enemy before the economy that eats on its growth, but the real enemy is the supply constraints.
The author is chairman and managing director, JK Tyre & Industries.
(As told to MANU KAUSHIK)