Reality Check India

Budget and industry moguls

Posted in Uncategorized by realitycheck on February 29, 2008

I watched several champions of industry perform on TV yesterday. They were each discussing what they want from the budget. Some wanted excise cuts, others extension of various holidays, still others wanted license fees cuts, one of them even suggested that some two-wheelers be moved into the “merit list” because sales was dull. Not one, not even one, said “Just give us enough electricity and good roads to the nearest port or railhead. Leave us alone, in turn we will pay fair taxes”. Big Indian industry has never been too keen on goods everyone can have. These are the so called non-rival economic goods. Ditto to the Congress party.


Apollo hospitals Dr Reddy was there too. He didnt seem to be bothered that the money saved by him in not constructing adequate multi-storied parking lot in his main Chennai hospital is at the expense of the residents of the area. Ten / fifteen streets away cars are parked on both sides of the street choking traffic and creating a mess. So, the government, by not severely cracking down on his patrons has enabled him to save crores.

I do not wish to pick on him or his institution. I just wanted to illustrate an attitude problem with our industry. The members actively sought intervention, ever so slightly pushing the rules in their favour. I wont even mention the worst offender of all, our IT industry. They wanted to extend their tax holidays beyond 2009, they might even get it. I have enough on this blog on the matter.

We then had real estate mogul Parsvnath and others , who wanted SRZs (Special Residential Zone) with equal status to SEZs.  A SRZ is a notified geographical region free of domestic taxes, duties, and levies with “special development rules”. Never mind the fact that nothing is being produced in a SRZ. Hey, you cant blame the realty guys because they know SEZs are really tax and real estate plays anyway. Why not call a spade a spade ? Moving on, we had textile lobbyists who wanted export concessions due to the rising rupee. Never mind that the Tirupur area is currently under a severe power crisis. Only the big guys with captive power plants are unaffected.

Most of them wrapped up their demands with a word of praise and feverish hope for the FM.


Tomorrow, when you find out that underwear with “nada” is going to have an excise duty cut, but underwear with “elastic” is being levied a nominal 2% surcharge. You will know why we need the budget.

Our industry, at least the old order, asked for it.

Roads, power, and simple taxes only create more competition, any idiot can do it. Getting your industry into a special classification and under tightly coupled complex tax schemes requires pure genius.

The Congress party and industry “stalwarts”. Made for each other.

3 Responses

Subscribe to comments with RSS.

  1. realitycheck said, on February 29, 2008 at 9:37 am

    Just in :

    All loans taken by farmers having less than 5 acres (2 hectares) are forgiven. The total liability is 60,000 Crores. No restructuring, just a blanket waiver.

    The reality :

    1. Farmers who paid back dutifully look like complete idiots now.

    2. All farm loans including for capital assets like pumps, tractors are forgiven. Does it make more sense to repo the assets instead ?

    3. Only loans from banks are waived. Most farmers in suicide belts get their loans from private agents (read larger farmers).

    4. Many large farmers / politicians having benami holdings upto 5 acres can simply laugh all the way to the bank.

    This waiver will result in a complete breakdown of the fragile rural credit system.

    Why ?

    The farmers who paid back fully or partially have now learnt their lesson.

  2. Budget | DesiPundit said, on March 1, 2008 at 3:41 am

    […] A short post but RC hits the nail on the head,  […]

  3. Pune Builders said, on March 3, 2008 at 7:36 am

    I don’t believe this budget can actually sustain itself .How can we have retail giants like WalMart entering the country and farmers being released from their debts at the same time .The budget should have focused on more infrastructure and amenities for these farmers so that retail industry does not directly impact them.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: