- Rail Budget: Railways to double spend on track electrificationRail Budget 2013-14 Live: Railways to double spend on track electrificationRail Budget 2013 Reaction: Political parties say common man will be hit hardAnalysts give mixed reaction to Rail Budget 2013, E&Y, Nomura tag it 'run of mill'
that instinctively, if they knew how market economies functioned (and accepted that non-market economies don’t function at all) instead of marinating in their confused Utopian longing for illusion. It is mind-bending that the most erudite, interesting, and civilised people in the Indian political space can be so irrevocably committed to such bankrupt ideas/ideologies, proven by experience to be false, and to keep pursuing the unpursuable in the ostensible interests of caring for the poor and the common man, while achieving precisely the opposite with their policies.
In this Budget, will the FM educate his political peers about the direct, strong connection between the current account deficit (CAD), which is out of control (because price subsidies are causing demand for energy to spiral and encouraging egregious waste), and the central fiscal deficit, which now is at the tipping point of going out of control as well? Will he use this Budget to explicate clearly that India must now “export or die” if it is to finance its ever-growing imported energy (and food) needs that will balloon when growth and real income growth are restored to their halcyon 2004-08 trajectories?
Those who argue that India can still finance a CAD and fiscal deficit of 3% indefinitely seem unfamiliar with the Krishnan dictum that “the long-term has caught up with us”. Consider the mess in the eurozone, where it was a tenet of public faith that one could finance budget deficits of 3% indefinitely. The result: the eurozone is over-indebted, in deep crisis, and will take years of reform to pull itself out, while sacrificing a generation in the process. No deficit is sustainable forever. If one runs deficits for too long, one has to aim at running surpluses in the future. Being incontinent for forty years (as India has been) has the same effect as being profligate for ten. We have been both. Will the Budget aim at the ‘impossible dream’ of establishing the foundations for generating future surpluses or will it continue to aim at ‘least-worst sub-optimisation’ that has become the leitmotif of the UPA-led government?
The last few weeks have seen an inexhaustible