Column : Don’t let the flower wilt

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: Budgets are somewhat like fresh flowers. You make a lot of fuss on the day they are out, and, by the day after, they look stale. The mind-numbing details about which tax went up or down and which subsidy was kept are forgotten soon by everyone except tax accountants. In economic terms, few budgets make a difference. Few change the strategic direction of the economy. Most are just make-do affairs; here today, forgotten tomorrow.

So, what can Pranab Mukherjee do to make a difference? First, he needs to present a ten to 15-year vision of where Indian economy is going and where he would like to see it go. Thus far, the cautious liberalisation strategy that Manmohan Singh laid down in 1991 has served India well. After the first ten hesitant years, the economy accelerated in the 21st century. Last year apart, India achieved a 8-9% growth rate for seven to eight years. Even the global recession slowed the economy down but not by much. India managed a higher rate of GDP growth despite the slowdown than during any of the first 40 years. The very idea that India considers a growth rate of 5.5% slow is a tribute to the reforms of 1991.

But the world was benign in the 1991-2007 period and India rode on the wave. Now we will have a slower recovery in the OECD countries and boom time may not come until 2012 if then. India has to grow at double-digit rates in a climate which if not hostile, will be at least tepid. India will have to be more stern with itself in raising resources and using them. Foreign investment will come but will need attracting more assiduously. It is domestic savings which will need harnessing. Here the most important thing is for the government—Centre and the states—to become net savers rather than dis-savers. The budget deficits have gone haywire since 2007. Chidambaram had promised to meet the targets of the fiscal responsibility legislation by 2009 but the recession gave a convenient excuse for overspending; after all, there was an election to be won.