XIM, Bhubaneswar Hosts Arthashastra 2010 to Discuss Future of Indian Economy after Budget 2010

Xavier Institute of Management, Bhubaneswar (XIMB) hosted Arthashastra 2010, the annual budget analysis, on the evening of 18th March. Deviating from its norm of picking apart the nitty-gritty’s of the annual budget, Arthashastra 2010 was more about the future of the Indian economy after Budget 2010, what possible challenges lie ahead and how to tackle them, and laying out a roadmap to make India the numero uno economic might.

XIMB has always been able to attract speakers of the highest caliber from various fields like media, administration etc. and this year was no different, with a panel rich in experience and insights. Kicking off proceedings was Mr. Neel Lohit, well known in banking and financial circles, and currently GM, IDBI at Mumbai. He brought to the table a banker’s perspective of the Budget, telling the students about the worldwide praise bestowed upon India’s robust banking system and the RBI for not letting it descend into the debt trap over the last couple of years. He also explained how the expected double digit growth of the asset books of most banks over the next fiscal would be due to recapitalization and the $2 billion credit line extended by the World Bank to the Government of India towards this end, more than any other reason, but he was critical about the methods used to reduce the fiscal deficit to 5.5% this year, which is expected to reduce to 2.7% by FY13, on track with FRBM requirements, using one time options like 3G auctions and disinvestments, which actually amount to removing a future stream of income from the hands of the Government.
On the dais next was Prof. Baidyanath Mishra, a multi faceted personality, experienced economist, academician and institution builder, all rolled into one. He commented on the choice having to be made between economic growth and the economic well being of the people, citing the case of the former being directly affected by the recent price rise and inflation currently hurting the latter. The pattern of development, according to him, with the rise of the service sector contributing close to 55% of the GDP, would not be sustained without support for commodity sector, industry and most importantly agriculture, whose contribution has shrunk to dangerously low levels of 12%, although 60% of the population are dependent on it for their livelihood.  
Shri Sanjib Chandra Hota, Ex-State Election Commissioner of Orissa, chose to term India’s comeback from the financial setbacks of the last two years as ‘L’ shaped rather than ‘V’ or ‘U’ shaped, owing to the government having to maintain a very delicate balance between controlling inflation and sustaining growth. He stressed upon the importance of improving the quality of fiscal deficit, rather than reducing the deficit itself, taking care to explain that if revenue deficit is a large part of the fiscal deficit, more debt is being used to fund current expenses rather than create assets.
Mr. Vijay Raina of the Indian Information Services, a well travelled man across the nations, brought into the picture his experiences from various international travails and vast knowledge of the international economy. “Growth is the focus worldwide”, he said, “and we would do well to replicate the same model in India”, citing the example of two options available to reduce poverty levels in India, through subsidies or investment. Already facing a direct subsidy burden of Rs. 1 Lac Crore, the government, according to him, was treading the wrong path, with subsidies creating no new assets, no self reliance and spurring no improvement. On the other hand, investment, did all of the above, as well as create employment opportunities.
Shri A. K. Sabat, an eminent CA affiliated with various reputed firms, came down heavily on the Finance Minister for introducing tax slabs affecting only a small part of the tax-paying public, while ironically promoting the intention of it ‘spurring demand’, for announcing increased tax collections of Rs. 20,000 Cr, which would have been higher if the Tax slabs had remained unchanged, for critically hurting the ‘aam aadmi’ on several fronts by introducing taxes on frivolous items, but not punishing scamsters accused of cheating the exchequer of thousands of crores of rupees, and for introducing service tax on goods by rail which the railway minister had left untouched, while the public is buried under double digit price rise. On the reforms front, he vehemently opposed the Direct Tax Code, which also includes the change from profit based MAT to asset based GAT, and the continued rollover of the proposed universal Goods and Services Tax.

The insightful session was brought to close with the vote of thanks by Prof. S. K. Padhi and mementos were presented to the speakers