This was the 18th economic reforms Budget. Eighteen is a significant number; it?s the age when you get the right to vote in an election, to marry, to drive a car, see an A-certified movie. This new-adult has had four foster parents?Dr Manmohan Singh, P Chidambaram (twice), Yashwant Sinha and Jaswant Singh?who raised the child with a sense of inevitability tempered with the electoral caution that is second nature to men who have to go to the Indian people at least every five years. But the quality of parenting has been erratic. Many instructions given to the child any one year have been reversed the next year, with little explanation provided to the Indian people to whom the child belongs.
Consider double taxation on corporate dividends. There have been enough flip-flops on this to convince a bystander that, like cricket, this is a game of glorious uncertainties. There have also been quirks galore: old quirks from the Licence Raj era that have lived healthily on, and new ingenious quirks. Old quirks: entirely unexplained tax hikes and cuts. Read the fine print of any Union Budget, and you are struck by the detailing: tax hikes on readymade shirts, tax cuts on steamboat motors, hikes on umbrellas, cuts on rubber slippers. If liberalisation is, at some level, about the end of ad hocism, we are hardly there yet. New quirks: Budgets keep producing surprising tax proposals: service tax on ATM usage, the fringe-benefit tax, mysterious surcharges on income-tax. The foster parents have, in these 18 years, both changed history and repeated the one they grew up with.
Yet, this 18-year-old has transformed a gargantuan nation and the lives of its billion people. GDP growth in 1990-91 was 5.6%; in 2007-08, an estimated 8.7%, on a much, much larger base. Poverty levels were down from 52.2% in 1991 to 27.5% in 2004-05. In 1991-92, we hardly exported any software. In 2006-07, we did $28.8 billion of that. Foreign exchange reserves rose from $5.8 billion in 1990-91 to $199 billion last fiscal. Indian FDI abroad was $3 billion in 1990-91; in June 2007, it was more than $29 billion. In March 1991, we had only 5 million telephones. In January this year, we had nearly 60 times that many. Rarely in the history of human civilisation has a nation risen so proudly to embrace its potential, ?not wholly or in full measure, but very substantially?.
The Budget presented yesterday is, as expected, an election Budget. Every five years, reforms? foster parents have doubts about the social charms and political skills of their child, and understandably so. But figures show that in the last three decades, election-minded largesse raised the fiscal deficit by an average 1% every election year, yet hardly ever has the incumbent government come back to power. A sudden disciplining of the ambitious child has not worked. As of today, the adolescent is an adult. He needs to now negotiate harder for what he needs and what a billion people could aspire for.