The secret about budgets is 98% comes straight, nothing you, FM or PM can do : Mohan Guruswamy
Hyderabad, July 8th, 2019 : Mohan Guruswamy, Chairman & Founder, Centre for Policy Alternatives and former advisor to the Finance Minister (1998), Govt. of India, delivered the Keynote address at the Interactive Session on Post Budget Analysis, organised by FICCI Telangana State Council in association with the Institute of Management Technology (IMT), Sudhakar pipes & fittings, HDFC and EY, on Monday at Hotel Hyatt Place, Banjara Hills. A high-powered Panel Discussion followed. The panelists included T Muralidharan, Chair, FICCI(Telangana); Mohan Guruswamy; Dr M. Venkateshwarlu, Director & Professor- IMT-Hyderabad; Aditya Bajoria, Partner-EY; R V G Kulkarni, Sr. Vice President, HDFC Bank and others.
Mohan Guruswamy said, the secret about budgets is 98% comes straight, nothing you can do, there is nothing much the finance minister or prime minister can do, they just shuffle things from one head to another, cut down of social welfare costs and allocated to agriculture and so on. They only play around excise and custom duties, there are no long range policies. There is no element of secrecy in budget, if you have to see anything in budget you need to see long term trends, on where is this budget taking us. The Indian GDP rate has been floating around 6-7% in the last ten years, this is not a GDP which will take the economy to $5 trillion by 2024. You got to do 13-14% normal GDP growth rate. However the chance of going there is receding very fast and our leaders in Delhi don’t seem to be aware of it or aligned to it.
The savings GDP ratio is coming down, comparatively the savings GDP ratio is 42% and it is down this year to 28% in India, unless savings GDP ratio goes up we are not going to gain capital expenditure and unless capital expenditure is up you are not going to get more jobs. I don’t think the finance minister has made anything to reverse this. The investment GDP ratio has to 40% to get $5 trillion by 2024, these are basic rules of economics you can’t up the system. The Government has not conformed with the Economic Survey 2019 Guidelines. Overall the budget is a status quo and the stock market is showing that. The net disinvestment is going to be Rs 21000 crs, and then they say 51% will be with the government. Without capital expenditure how are you going to give new jobs. Giving 11.4% of GDP to government employees as salaries and pension is crony capitalism, its colonial economics at its worst, take money from everybody else and give it to 23 mn people working with government, this sector keeps growing.
This year’s agriculture got more, it’s nice. The rural spending has been on the rise since UPA because of subsidies, but no assets are being built. For the last 26 years the government has not added one acre with irrigation facility.