A leap year budget

A budget that will help the UPA government to leap - frog to comfortable position to campaign for a second term in power. The Budget 2008-09 has all the ingredients of a typical Bollywood box office thriller - guaranteed to rock the opposition out of slumber. Finance minister P Chidambaram's Rs 60,000 crore bonanza for farmers is a virtual sell out to the vote banks of the farm sector. Rationalisation of tax slabs to benefit the middle class wage earner is another attempt to keep them on their good side. Slash in excise and customs duties to benefit the manufacturing sector will result in a loss of revenue of over Rs 5000 crore. But the gamble is that it will be more than made up by increased production, increased spending by the middle class, greater tax collections and greater tax buoyancy.

So far so good, for the farm sector, for the individual tax payer, for the manufacturing sector, for the health sector, for the education sector. But the infra- structure sector such as power and oil which is the engine of growth for the country's GDP have not been addressed that well. No doubt there is a statement about five more ultra mega power projects coming up for bids, but there is no concrete announcement barring the one on transmission and distribution from through a new funding mechanism.

There is an acute shortage of civil engineers and mechanical engineers needed for infrastructure projects. Students migrating to telecom, IT and computer science engineering have caused the rut.  But this anomaly is now being sought to be corrected. Finance minister Chidambaram has realised the need of the hour when it comes to acute manpower shortages, particularly of skilled manpower, especially for the infrastructure sector. So the allocation of Rs 15,000 crore for setting up a non-profit, non - government institution which will come under the private public partnership scheme to train man- power for critical and important projects in the country, will be an outstanding contribution by the UPA government. Power sector and oil sector is woefully short of shop floor level skilled manpower. A good initiative.

While most of the budgetary provisions such as outlays on social sectors, reliefs to the farm sector and individual taxpayer and manufacturing sector, are laudable, gaping holes are seen in the budget. There is no mention of how the government is going to make up the Rs 60,000 crore give away to farmers in terms of reimbursement to the banks so that the latter can disburse fresh loans to the farmers. No provision has been made for the recommendations of the 9th pay commission report, which in likely to impose a huge burden on the government.

The UPA government is apparently banking on assumptions: 1) the same level of tax buoyancy is maintained 2) profitability of the corporate sector will be the same as last year and 3) monsoon will continue to be good and proficient as in the last few years.With any one of the assumptions going wrong, God forbid, the government has an onerous task to firefight before the elections. Chances are that its assumptions are based on sound logic and thinking and the gamble will pay off. Only one thing not under its control is the monsoon - one can only hope and pray that the monsoons don't play truant and arrive on time and are proficient as in the last few years.

Budget not much attention to infrastructure

The Union Budget has completely left in the background the infrastructure and logistics providers of the economy. Barring special mention of an additional UMPP immediately and another five that will come up for bidding and a transmission and distribution fund mechanism, there has been no major address to this sector by the P Chidambaram in his budget proposals for 2008-09.

23 more airports, including the Chennai and Kolkata metros, need to be modernised to handle the explosive growth in passenger traffic as the country witnesses an unprecedented economic boom. Two-tier and three-tier cities such as Nagpur, Cochin, Ahmedabad, Baroda, Mangalore and Bhubananeshwar, need to be modernised urgently. While the civil aviation ministry is equipped to handle this, one expect the government to make a statement on how this sector is going to be handled - whether it will receive budgetary support.

The socialist cap andthe capitalist cap

RJD Leader and railway minister Lalu Prasad has shown that he can wear the two caps successfully as he did last year. The socialist cap and the capitalist cap.  He has been a socialist by not increasing passenger fares or freight rates. Instead he has dropped passenger fares and proposed to make the travel cheaper in the 2nd AC and 1st AC classes to compete better with the airlines.

In 2008-09, Lalu has to spend something like Rs 37,500 crore, an increase of 18 per cent over the previous year. In addition he plans to raise Rs 25,000 through the PPP route.

Amazingly Lalu has managed his entire tenure of five years in the railway ministry, the biggest logistics player in the world, without raising passenger fares. A record. Everyone knows how Lalu achieved this: through greater wagonloads, longer trains haulage and increased time turnover on wagon loading. As he himself proudly says: "all this achievement without spilling any blood on the floor." Critics have accused him of fudging figures but the boom in the economy had been the major factor. The left party allies have totally objected to the railway budget as they think it's a front door to privatisation, which they are against. But other parties have not objected.So Lalu lives on to show he is an asset at the Centre and not so much in the state. The state of Bihar still wallows in backwardness when compared to states such as Tamil Nadu or Gujarat which are marching ahead smiling all the way to prosperity and modernity.

Pharma a directory - a new initiative

The National Pharmaceutical Pricing Authority (NPPA), coming under the ministry of chemicals and fertilizers, has taken a major initiative by bringing out a national level directory containing statewise addresses of pharmaceutical manufacturers both for bulk drugs and formulations with full contact details including emails, telephone nos and websites.

Available in CD and printed format, it contains a list of more than 10,000 pharmaceutical units in the country. Very much in a user-friendly manner, it's a wonderful compendium to possess for the medical fraternity, the pharma industry and even the consumer of drugs besides the government.

 Much of the credit goes to Dr Ashok Vishandass, deputy director general, and NPPA, who has taken meticulous efforts including very unconventional and unorthodox methods to collate the data. It is believed that the compendium would be useful in conducting the first pharmaceutical census of India, expected to be launched in the next two to three months, according to Ashok Kumar, chairman NPPA, an IAS officer.

The Minister of Chemicals Ram Vilas Paswan released the directory at a function in New Delhi recently. He is of the firm view that the pharmaceutical industry must lower prices and sell drugs at affordable prices to the consumers. The Drug Price Control Order must be strictly observed and any violation would be dealt with sternly, he said adding that an online complaint registry had now been opened by the government where consumers could make complaints of over-charging by druggists and help penalise them.

Paswan wanted greater coordination between the chemicals ministry and the health ministry for making available drugs at affordable prices to consumers and at the same time monitor their effectiveness in treatment of ailments. Regretted that such coordination is not that effective now.

The NPPA has also brought out a compendium of an exhaustive price list at which bulk drugs and other formulations ought to be sold so that the consumers can cite violations.

J S Sandhu, joint secretary, ministry of chemicals, felt that these two compendiums would go a long way in streaming the pharmaceutical industry in India and make them world class. Consumers would also get a greater sense of security now.

Reliance power shares buyback

The Reliance Anil Dhirubhai Ambani Group (ADAG) is now on a confidence building measure with its investors. Though the IPO of Reliance Power was an outstanding success and it was all gone in 60 seconds since its opening, it sort of got dented when the shares took a nosedive at the bourses the next day. ADAG led by the dynamic Anil Ambani sought to reassure investor confidence by offering bonus shares. Now it has gone a step further: at its forthcoming board meeting next week, ADAG board will decide on whether Reliance Energy, the parent, can indulge in buyback of shares so that its position gets further strengthened in the capital markets and market caps of the reliance group stays strong on sound sentiments of the investors.

Though it's a divided house, the Reliance group whether it is Mukesh's or Anil's, both the scions have a bit of their father in them. They treat investors like Gods and would not like their confidence in their group eroded.  Cheers to Anil.