Union Budget 2013: To hell with public morality, bring on the 'animal spirits'

The demands on P Chidambaram are many as he rises to present the Union Budget. Welfare schemes for a government that wants to win the next elections, corporates that want more tax breaks and markets that threaten to withhold their ‘animal spirits’ unless he delivers what they want. And all this while attempting to curb the nation’s fiscal deficit that threatens to spiral out of control.

But in an attempt to woo foreign investors and the various corporate houses that hold sway over political houses, does the Finance Minister risk leaving the common man and the marginalised out in the cold?

[caption id=“attachment_642878” align=“alignleft” width=“380”]  Reuters[/caption]

The Finance Minister should use this budget to emphasise the “ political philosophy and notions of public morality” behind the current government’s economic philosophies, argues columnist Harish Khare in the Hindu today.

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Acknowledging that the Finance Minister has friends in the corporate crowd, Khare says the UPA government cannot afford to present a budget that favours particular corporate houses, a move that will only backfire in the long run given how much it will alienate the remainder of the nation’s citizenry.

Nonetheless, it must be presumed that the Congress has not totally shut down its political antennae. Its leadership knows that many of these captains of industry have an interventionist political agenda. It is no secret that a sizeable section of the Mumbai club is keen to rearrange the ruling arrangements in New Delhi around, say, a Sharad Pawar or a Narendra Modi after the next Lok Sabha elections. There is no earthly reason why the budget should seek to mollify these very greedy and politically ambitious business houses that have proved so intractable these last few years. Rather, the corporate bluff must be called.

Arguing that the budget needs to be the promoter of social good and not just market sentiment, Khare says that Chidambaram needs to stop worrying purely about the growth of the Indian economy and ensure that the government’s handling of corporate India is balanced, and not biased as is being widely perceived.

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However, the Finance Minister has little choice but to ignore such advice. As the elections loom and the government constrained to contain fiscal deficit that threatens to spiral out of control, the Finance Minister may have his morals in place, but will perhaps be forced to ignore them.

Corporate India, whether we like it or not, is the fuel powering the political engine of the nation. The Finance Minister would be a terrible politician if he chose to alienate the government’s corporate allies with just a year to go for the elections. The animal sentiments of the stock markets will also be left unhurt in order to ensure those dollars keep coming in to ensure the current account deficit remains manageable, and allow the government to attempt one last welfare scheme they can hope will swing the next national elections and upcoming state elections in their favour.

There may be a union budget in the future that upholds governance, political morality and economic equity. This is unlikely to be that one.