Budget 2014-15: Time to change rhetoric into action

Jul 07 2014, 16:50 IST
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SummaryIn the face of an economic slowdown, everyone agrees that bitter medicine is the need of the hour.

The month of May saw the return of single-party rule to New Delhi for the first time in nearly three decades. Having successfully sold the promise of reforms and disruptive change, Mr Modi’s team will now be watched for how it delivers on the dizzying rhetoric of the election days.

In the face of an economic slowdown, everyone agrees that bitter medicine is the need of the hour. There is only one glitch – no one wants the medicine administered to themselves.

At the same time, Mr Modi is in the business of winning elections, and there is a host of them just round the corner. He and his team will thus tread with caution, looking to balance populism and fiscal prudence, although the space for the former is limited (so is the appetite for the latter, whatever one might say in public).

Mr Arun Jaitely’s maiden Budget should start by restating the gas-filled numbers in Mr Chidambaram’s last Budget and bringing government accounts back down to the earth. A complete and correct picture of the state of public finances would also give the government some space to implement much needed reforms. These reforms would be more difficult if it continues to live in the virtual reality that the last few Budgets have created.

The major step that Mr Jaitley should propose is a repeal of the horrific retroactive amendment to tax laws in the 2012 Budget. That one act of policy activism alone has perhaps caused incalculable damage to the country than years of “policy paralysis” combined and needs to be urgently undone.

The Doing Business 2014 report ranked India at 186 among 189 countries in enforcing contracts. Sanctity of contract is one of the foundations for a market economy. Poor disposal rates and ill-developed arbitration mechanism are responsible for this state of affairs. The Budget would do great and lasting service to the nation if it emphasizes judicial reforms. The disposal rate and virtually unrestrained appeals have choked the system, and more than 3 crore cases are pending in courts. This has implications not only for business, but for civil rights as well. It is estimated that almost 2.5 lakh people - 65 percent of those in prisons are under-trials. This reflects very poorly on us as a modern republic.

A review of all cases where the government is a litigator and closure of frivolous cases would go a long way in clearing the

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