(Click here for a live webcast of the FM’s Budget presentation – starting 11AM IST)
Here at IEB, you (our
faithful readers) can always trust us to get excited about something like the FM’s budget presentation. CNBC’s got the pretty women covering the reactions on the trading floor, old Indian Marxists are dusting off their loafers for that appearance on NDTV, and here at IEB, we libertarians are simply smirking and waiting for the bloodbath.
The circumstances couldn’t be more propitious: markets globally have crashed. China’s down 9%, Bovespa’s down 7%, the NASDAQ is down 4%. Our precious SENSEX – ever resilient to logic – had touched highs in the 14,000s, and has already come down a bit. Today, however, is a new day, and we’re about to see some fireworks.
In the next few hours, the Finance Minister will deliver the budget for the coming fiscal year. India has already been testing new (economic) limits, as we have documented on this blog – and, the FM’s address will come at a time when confidence in the committment to reforms is waning, and onion prices are starting to make people worry. Just for good measure, the Goddess Laxmi has thrown in three more obstacles: crashing global stockmarkets, a recession warning from Alan Greenspan, and sustantial electoral losses for the Congress Party in the state assemblies.
So the burning question is: will he make it worse, or help us (investors) out?
People worldwide already have the selling
impulse coursing through their veins, so it would be unfair to lay blame for the market bloodbath which is sure to come, squarely at the FM’s feet. Nevertheless, one must ask: is he aware?
Does he realize that India has to keep reforming in order to open up supply-side constraints? And that the need for reform has increased, not dimished?
Does he acknowledge the
need for the independence of the Central Bank? Because short term constraints have to be addressed through adept demand-management?
Most of all: does he realize how much is riding on this? This is not just about the markets and the billions of wealth which is likely to be wiped off (and probably, just as speedily, recreated). It is about reforming a broken system.
India’s population, its private sector, and its civil society have emerged; but the government has thus far lagged behind -thereby constraining the others. The moment today is about understanding how the aspirations of Indians have changed and the bar could not be set higher.
Remarkably, about 16 years ago, another man stood at a similar precipice of [economic] history and chose to follow his dreams and what he knew to be right, rather than what he thought was most expedient.
Will this Finance Minister follow in those footsteps? Will this be the “Dream Budget”?
If he doesn’t or if it isn’t, trust me: Sell.
(Click on the embedded links above for good Budget Day reads)