Union Budget of India for the year was presented on 1st of February 2018. The next day there was a session in Pune arranged by Marathi Daily Loksatta and anchored by editor Girish Kuber who is an eminent journalist, economist and author of many best selling books in Marathi including one on “Oil Economy”.
I went to attend the session which was at 5:45 PM and reached there by 5:40 PM and to my surprise the session was houseful! Not only that there were 200-300 people standing downstairs at the entrance of Tilak Smarak Mandir auditorium. Fortunately the organizers had arranged speakers so that people could listen to the discussion. It was a 2-2.5 hrs long event and slowly the crowd settled in, sat down and enjoyed a very stimulating conversation!
Seeing the appetite for “literacy in finance”, “understanding the budget” etc. we should have more of such events; maybe some aspects in the syllabus of primary and high school. Most of the attendees were students of competitive exams such as UPSC and were frantically writing notes, unfortunately without paying attention to what was being discussed – a sad reflection of how our education system works. Here are a couple of pics of the event. I was standing for 2.5 hrs 😦 but in the end it was worth the pain.
Here are some interesting points which I remember from the event.
Oil Bonanza for the Govt in last 3-4 years, possible reversal of it in 2018 and implications of that:
- When Crude Oil price moves by $1, it amounts to impact of Rs. 8500 Crore for India’s oil import bill. We still import 82% of oil we need.
- Current Govt was extremely lucky because the Crude Oil prices in recent years have been very subdued. During previous Govt’s tenure the crude oil prices were in the range of $100 per barrel. They touched high of $147 per barrel at one point! During this Govt’s first 3.5 years the oil prices went to as low as $30/barrel and stayed between $45-50 for most of the part.
- That’s a huge windfall of savings on oil import bill. (Refer #1 and calculate for yourself)
- However, the petrol and diesel prices in India have been going up and up! It was Rs. 45-50 during previous Govt and Rs. 75-80 now! People in the same government made a lot of noise during previous Govt’s tenure about oil prices in world dipping marginally and yet Govt then not passing benefit to consumers. Can you imagine the hypocrisy by the then opposition and now ruling party? See this video and check yourself:
- This is because, as Girish Kuber rightly pointed out that: “Good Economics is Bad Politics, and vice versa“
- Another important point highlighted by the other speaker was that the Budget assumes Crude Oil prices at average of around $55 / barrel for this year, whereas the prices on the day of budget was already 70+. Some even claimed that oil can go back to $100/barrel zone. If it does happen, it would have massive negative impact on the budget.
- Kuber also heavily criticized proposal to increase Minimum Support Price for farmers to 1.5 times the cost and a “massive(?)” health care plan termed as “Modi Care” with meager budgetary allocation of Rs. 2000 Cr per year.
- Kuber also praised the Economics Survey of India 2018 and advised to read it in detail! This is the best and most comprehensive report in many years, he said, however, it has no bearing on the budget. In fact budget goes against the Survey findings/recommendations in many areas.
What I liked about the session was that it focused more on discussing contours of budget and not going into minute details of each category. I think we need a broad awareness, education on “How to Read Budget” before we get into discussing impact of a particular aspect of budget.
Lastly, one should keep in mind that budget is a “planning” exercise. Things don’t happen, or do not happen because they are “planned”. They can only happen if plan is executed well. Budget shows us a trajectory, a general sense of direction and nothing more.
One of my professors used to say” “I would rather like budget to become a non-event. Do your planning and get on with implementation. Too much time and energy is wasted on debating budget, and analyzing stock market reaction and so on.”
I completely agree with him. I am enthused by budget as much as I am excited by my study or reading plan for the rest of the year…come to think of it, the plan is not going well. I should blog less 😦