When will we say No to Union General Budget?

Indian Fiance Minister Arun Jaitley will move the second General Budget on 28th February 2015. The first one he introduced was only a few days him taking over finance portfolio and possibly many of the promises made in the BJP (read NDA) manifesto could not be included.

Now that the finance minister has set up a group of chosen bureaucrats for making the budget exercises, including a new chief economic adviser, who has been drafted from  academics and has an orientation in multilateral organizations.  Newspapers, specific lobby groups, trade unions  etc, will be active in the coming days in pouring their views and suggestions. Also, the new regime is actively encouraging every citizen to participate in the budget making. In all such suggestions, there will be a post script that  the measures are meant to revitalize the economy.

 Interestingly, in today's Times of India, there is an edit page article written by one NY Krishnakumar, who has introduced himself as a money manager titled " Disrupt and Grow". He has alluded to disruptive innovation of budget process and tax procedures to improve financial transparency and tax terrorism. He has also suggestions for disrupting the government departments to make them more functional.

I eagerly went through his suggestions whether he has made any exhortation on abolishing the Budget. There is no such suggestions expressed. I do not know whether he intended one. If he has suggested that measure, I would have completely agreed with him, Because the Budget exercise has become mundane and more ceremonial than anything else.

I do not know presentation of General Budget by the union government is a constitutional provision or not. Assuming that it is a constitutional provision, Budget means only presentation of accounts that is Revenue and Expenditure for the next year. it should not be clubbed along with announcement of slew of measures supposedly to kick start the economy. Many had voiced this view several times. But the Budget exercise continues as it is, though  with some cosmetic changes.

Let me talk about one of  of the cosmetic changes that have been effected over the years. A few years back, the Budget was presented on the last day of February barring a Sunday  and the Budget proceedings would start sharp at 5 PM. I used to often wonder why at 5 PM? No one could give me a proper explanation. Later, I came to know that it was something followed by the British to synchronize Indian time  with he British since   some of the tax proposals in India was eagerly  awaited  across the continent particularly by the so called FERA companies.  A lot of speculative activities were carried out  in anticipation of the Budget. Thankfully, we had snapped the bonds with that heritage. Could we now de-link our major decision making process  from the Union Budget and take them at our will and when needed. The government that did away with Planning Commission can do this also. Are the Prime Minister and Finance Minister listening?

 For more details pl. contact Business Economics and Services Team (BEST) E mai: jthac1234@yahoo.com,jthac1234@google.com

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FDI in Construction: More Rhetoric and less Action

The decision taken by the Indian Government to relax the rules in the construction sector, presumably to bring in more FDI into the cash-starved sector, is at best a ploy to tinker with policy framework, which may not yield the desired result. By reducing the threshold of minimum amount of FDI, minimum floor area and other cosmetic changes will not suffice the purpose.

The reasons are not far too seek. Our construction sector including the road building is steeped in an opaque framework. Even the so called big builders are known for hiding facts from the buyers and the authorities, not to speak about the rampant scams and corruption charges leveled against the  builders. No  builder hands over the flats to the needy buyers in time. Sometimes, the delays are so long that the buyers have to wait for years together. Sometimes, the schemes are caught in lengthy court cases. There are occasions when the builder goes missing after collecting the money.  The government agency Delhi Development  Authority has not handed over promised plots to 25,000 people even after a lapse of 34 years and that too despite the directions of various courts including the Supreme Court of India

One need not have to go far searching for examples. How many housing societies in Delhi and NCR region are struck on account of these reasons. For instance, there are several dozens of societies in Dwraka which are still unoccupied on account of the court cases or lack of approval from DDA or other regulatory bodies.

In places like NOIDA, Greater Noida, Gurgaon, Sohna etc. advertisements are coming up every day inviting the public to invest in flats and other properties. The general public is scared of doing that because of the preponderance of bitter experiences, which are in the public domain.

 The government   should  clean up the system on an urgent basis. For this, the first thing to be made is setting up a strong regulatory body, which can evolve building bye-laws and implement them without looking into the parties involved in it.

Two, the regulatory body should be given powers to redress the grievances and take actions against erring parties.

Three, consider imposing hefty penalties on the erring parties immediately rather than allowing the case to be drifted in the lengthy court  procedures.

Four, impose a penalty clause on all construction activities in case the builder or contractor fails to deliver it in time. This money should go directly to the  buyer or buyers' organizations for common upkeep.

 Fifthly, create a standard and uniform rules and regulations for all states.

The botttom line is that if the government is wanting to bring more FDI in the construction, town ship building or creation of smart cities, mere rhetoric will not help. We have to have credible structures to ensure transparency and fairness to the stakeholders.  Enactment of foreclosure laws has protected the interest of the builders and lending agencies , against defaulting buyers . Should we have a similar law  to protect   the buyers as well, enacted and implemented.

That will signal the faith of the people in the system and will  create an atmosphere  for channelizing FDI into the country. Otherwise, the much touted housing for all will remain   as a pipe dream.   

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