An open letter to Manmohan Singh on the budget 2011


Dear Mr. PM,

The whole country is feeling that the budget presented by you is a balanced budget for 2011. While one can’t disagree, I strongly feel that this country lacks a visionary even among people like you who are economically sound. So lets just understand the basic issues plaguing the country at this point in time and whats the urgent need of the hour.

  • Rising prices and fiscal deficits – Either way you look at it, whether you increase fuel prices or whether you increase taxes the bottom line is that the products and services get costlier on the people availing them. This means that people shell out more from their earnings to increase revenue to the government. However as in the past no matter how many items and how many subsequent increases in taxes you propose, the country still lingers on with a fiscal deficit instead of a fiscal surplus. The true visionary therefore needs to bring the country into a surplus situation. While here the stock markets here are rejoicing on lesser fiscal deficit rather than questioning you on when you can show the accountability to bring in a surplus situation
  • Scrapping tax holidays and its impact – True the software industry has been enjoying a tax holiday for a decade or more now. But it was always in the governments control to have changed that long back. What is unfortunate is NOTthat you are scrapping that now, rather that it hurts the salaries of both existing and upcoming executives at a time when the country is already reeling at high inflationary levels. If only you had brought about this scrapping of tax holidays in a phased manner starting all the way from 2001 upto now, salaries would have been moderated and most people would have been leading a more realistic life by now. Spending would have been calculated, reasoned out and the economy would have followed a linear growth curve instead of a cooked up exponential one. By all means one knows now that software industry is not the major contributor to the 8% projected growth anymore. Its infact the feeder industries that contribute more to this growth. However you should not forget that this industry is a big driver for that growth. By introducing a tax holiday long back you and your governments are directly responsible and accountable for the rich-poor divide that has been created which will take years to flatten down.
  • The tax exemption drama – With baited breath at every budget the middle (cattle) class expects you to waive off taxation on an extended amount each year. Just because this is a populist expectation, you have also always raised this exemption time and again. While its some reason to cheer, its also a concern that you have not substantially looked out for ways to mobilize people to save effectively for their future other than just by increasing exemption limits, that too at a time when inflation is so high that it hardly makes a difference.
  • No proper agricultural policy – Agricultural lands are getting devoured fast and furious by land mafia for construction of ‘luxury’ homes at such a pace that since the past decade a metro like Bangalore has nothing left for its green cover. When you look at rural areas, constant power cuts, no policy for support prices and no importance given to agriculture has changed many a farmer’s mind to sell his land instead of cultivate leaving us with no option but to import foodgrains which we were once proud of growing in our own country. Someday at this rate, we (including you) will be left at the mercy of the food producing countries and their prices to get even three square meals a day. This is already happening to Oil (which i will come to in a moment), but when it happens to food as well, it hurts the most. The real loss is in making people eat packaged foods which are hardly any value for money, or healthy, leading to a situation which is almost near starvation in the near future. When health problems arise out of this, that becomes a double whammy on the already affected and make them pay a fortune to repeat this cycle of ill health and unhealthy food until all of us die of some mass epidemic some day.
  • Oil pricing – In your own best interests of vote bank politics and useless chaos, you have decided to keep the price of diesel low, while you go on increasing the price of petrol every other month. This is perfectly acceptable to us, provided you reduce the duty on petrol. Given that urban transportation is a big mess even in organized cities like Bangalore, and that your infrastructure budget overtures never end, it makes commuting from one place to another a constant nightmare to live with making it thus necessary for people to own cars. Once the budget is over and dust settles down, you then increase the diesel price by Rs.2/- each time knowing fully well that every single item that depends on this diesel for transportation will increase by Rs.2 or sometimes even twice or thrice that. Are you not visionary enough to bring in preferential diesel pricing and also avoiding pilferage at the same time? Do you think your experience in running the financial affairs in this country are not strong to control this loophole? Perhaps we can give an opportunity to farmers to transport everything by bullock carts to all cities. This way they get employment, we rely less on inflating food prices due to diesel price hikes and the country can live in peace. Put on your thinking cap Mr.PM and get the innovators to work out other ways. Promoting greener fuels is good, but not alone enough to remove the burden each price hike comes with.
  • UID and expectations – The UID initiative is definitely a good move and a much wanted move, but it also has to address providing social security, health insurance and focus on things like the 401k plan in usa, for retirement savings. Many things can be linked to UID and it must provide us our fundamental rights in lowering these important costs for government services. This boils down to the fact of rooting out corruption in government units (like hospitals, etc) and making them above par with private services getting more accountability and enabling bureaucrats to have more say than politicians. It requires a fundamental shift in the way of thinking and execution but do you have the guts and prowess for that Mr.PM?
  • Service tax increases on hotels and hospital services – Agree that you want to increase taxes to cover these sectors, but let me question you how far has the government gone in providing good quality government hospitals and hotels where people can stay decently and get services below Rs.1000 a day? Are you saying government cannot match up to private counterparts? If so, then again its a problem with vision and the fact that we are not learning from other countries even after 60 years of ramp up time!
  • Corruption – This is the most talked about subject and it almost always boils down to the fact that it is we who support corruption by paying bribes everywhere. But from the past 60 years have you ever brought about a fool proof system using the available technologies so that no government department work needs human beings to interfere with their bribe taking hands? how about documents with digital signatures? Things are there Mr.PM you just need attitude enough to spank your cabinet members all the way until your last peon to drive home the point.
  • Missing focus on priority sectors – This is the final point I wish to talk about, and from the past 5-6 decades some areas have seen more and more stronger focus as for example infrastructure as a case in point. But then primary education, support for the elderly and destitute, focus on uniformity in healthcare, afforestation in restoring ecological balance, expansion of education to provide more fields for specialization and recognition, removal of quota systems to enable people to feel competitive and come up brighter, improving public transport by involving more community based options, reducing reliance on fossil fuels and ensuring the right innovations are taken into products as a matter of policy, focus on improving all cities and villages uniformly, better power distribution and greater reliance on wind energy, support prices for food stuff and proactive handling of inflation situation – the list goes on.

Its important that you realize that growth for the next decade cannot be based on age old economic policies anymore. We need a fresh vision, we need to be able to hear public opinions and encourage collective and inclusive policy making, and ensuring all sections of the society actively participate in making India achieve vision 2020, that is if there is such a vision. If not, its about time we make such a vision statement right now.

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