& çâÌæÚUæð´ ·¤è ¥ôÚU Îð¹Ùæ ÁæÚUè ÚU¹ð´ ¥ÍæüÌ ¥ÂÙð ÜÿØ ÂÚU ŠØæÙ ÚU¹ð´Ð ãæÚU Ù ×æÙð´, €UØô´ç·¤ ·¤æ× ·¤ÚUÙð âð ¥æÂ·¤ô ©gðàØ ·¤è Âýæç# ãôÌè ãñ ¥õÚU ÁèßÙ ·¤æ ¹æÜèÂÙ ÎêÚU ãôÌæ ãñÐ ÖÜð ãè ÁèßÙ ×ð´ ç·¤ÌÙè Öè ·¤çÆÙæ§ü €UØô´ Ù ¥æ°, çÁ™ææâæ ¥õÚU ©ˆâæã ÕÙæ° ÚU¹ð´Ð ŠØæÙ ÚU¹ð´, ÜÿØ ã×ðàææ ¥æÂ·Ô¤ Âæâ ãôÌð ãñ´ çÁ‹ãð´ ÂæÙð ·Ô¤ çÜ° ÂýØæâ ¥æÂ ·¤Öè Öè àæéM¤ ·¤ÚU â·¤Ìð ãñ´Ð

Budget: a few changes can help

Bird Paksha Paul
AROUND the late 1990s when I was a jobseeker in Sydney, a poster by the Apple company in which Mahatma Gandhi was posing serenely with his iconic charka caught my eye. In the corner of the poster were the words "Think different". Apple, at that time, was floundering in challenges and had little share in the tech market. Now Apple has become the largest company in the world, and it has done so by thinking differently.
Why cannot we think differently while preparing our national budgets? It has been rotating in the same whirlpool of style for the last 40 years. Why is listening to the budget speech still such an ordeal? A nation's most important economic document must be short, sweet, and engaging. In 2011, President Obama spoke about America's long-term budget and planning in just 42 minutes. But we take hours. A tribute to Bangabandhu and thanks to the prime minister can be conveyed in just two sentences instead of a couple of paragraphs. Since the budget speech is now available online across the world, most foreigners will find us very talkative and bombastic. And, indeed, we are. But the time has come to change. India's economy is eleven times bigger than ours, but our budget speech is three times larger than theirs. We really talk more than needed. Our 106 pages can easily be trimmed down to 40 pages without losing any vital messages or information.
Despite various criticisms from economists, this year's budget has nothing out of sort. A fiscal deficit, equivalent to 5 percent of GDR is fairly acceptable for developing countries. The crucial part is how the deficit is financed. Almost half (44 percent) of this deficit will be met by bank borrowing. This aggressive venture of the government will crowd out private investors and stoke inflation, which is already high. Inflationary pressures will in turn erode part of con-
sumption, which is 75 percent of GDP, and thus may reduce the projected growth rate of 7.2 percent for the next fiscal year.
India's budget deficit is 5.1 percent of its GDR and the corresponding figure for Pakistan is 4.7 percent. It may seem that Pakistan is in better shape than India. But the reality is different due to two reasons: a big unproductive chunk of Pakistan's budget goes to service its army, and Pakistan's bank borrowing is much higher than India's. The results are consistent. Pakistan's inflation target is close to 10 percent while India's 6.6 percent. India's economic growth is estimated at about 7 percent while Pakistan's 4.7 percent for the next fiscal year. Although economists have reached many consensuses, there is no agreement in economics
about the safe percentage of deficits as a share of GDP. In most cases, the lower the better. South Africa's deficit is now 4.6 percent. They, however, plan to reduce it to 3 percent by 2015. In the late 1980s, India's fiscal deficit gradually became 10 percent of its GDP, plunging the country into their worst financial crisis in 1991. As per evidence, a country can afford deficit at around 5 percent of GDP as long as it grows at about 7 percent or above. Hence, balance and judgment are required.
The government's projection on growth (7.2 percent) is ambitious and inflation (7.5 percent) underestimated. Given the rising demand for food and fuel in two emerging giants, China and India, there is little possibility of international commodity and oil
prices to plummet. Hence, a growth rate of money supply at 18 percent is likely to make inflation hover over double digits. If so, the target on output growth will have to be compromised. Why cannot we change the culture of overoptimistic estimations? We should not make professionally unsound estimates just to be politically expedient. Why cannot we speak low and achieve high? Not the other way around.
'Growth' is the most important number in the budget for every country. Since growth has a tremendous trickledown effect, it is often regarded as the panacea for all major ailments in developing societies. Unfortunately, we debate every year over the accuracy of growth figures. People misconstrue economics or accounting as a
profession of dishonest numbers. That is ignoble. Cannot we change the method to make growth numbers solid and incontrovertible?
Growth figures are not like stockmarket indices that can be collected the day before the speech. It takes time to get data on multiple sectors. Accordingly, the finance minister gives us a tentative number based on assumptions and estimations, or sometimes political pragmatism. In section 12 of the budget speech, the finance minister gave a growth figure of 6.3 percent based on data up until April this year. Again he throws another number in the neighbourhood of 7 percent based on expectations and wisdom, creating room for economists to argue over fractions of numbers and delivering chances to politicians to spawn ridiculous comments on the budget. This has been the culture since the 70s, and it is unnecessary.
If we make a cutoff point, for example, April, to calculate the growth figure for the outgoing fiscal year to be ended in June, the room for controversy is eliminated. Then Boro production of this year can be routinely added to the calculation of GDP for the next fiscal year. More precisely, if we take the last day of Chaitra, April 13th, as the cutoff date, that will not only make our Bangla year more functional, but also make growth calculations more feasible and solid for the finance ministry. Another option is to merge the fiscal year with the Bangla year. Our farmers and petty businessmen have been using the Bangla year as their financial year for ages. Cannot we begin our national account on the same day other people begin their traditional Halkhata, on the first day of Baishakh? Most nations define their fiscal years as per their convenience or the agricultural cycle. The fiscal years for India, the UK and the USA begin on April 1, April 6, and October 1, respectively. Our time has come to think differently.
The writer is an assistant professor of economics at the State University of New York at Cortland.