Home Retail Ouch! Government’s Work is God’s Work!

    Ouch! Government’s Work is God’s Work!

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    Right at the top, beneath the cornice of the Vidhana Soudha, the seat of state governance in Karnataka, rests the motto engraved in gold: “Government`s Work is God`s work!” If that were to be true, every politician and bureaucrat who has done work out of here is really fulfilling the purpose of what God intends for her people. And remember, God is a woman! She always was!

    Taking a cue from that motto in gold, the government`s work is, in many ways, really God`s work. Never mind the motor-mouth politician. Never mind the bureaucrat. Never mind the process at large. In ethos, the government`s work is really God`s work. Governments are meant to take care of their people. That is their prime purpose. P Chidambaram attempts that reasonably well with this Union Budget for 2007-08.

    If God`s work is to be accomplished, the budget is a tool that points the way, defines the purpose, governs the needs, and lets loose the funds to achieve the purpose. If one views the budget as this rather macro piece of work, the budget is an important piece of work. Less important than what it used to be in terms of impact and import some ten years ago, but nevertheless still important!
    The macros then
    The macro economic scenario for the country has never been as good. The GDP growth rate clocking 9.0 per cent for 2005-06, and repeating it all over again with a robust 9.2 per cent for 2006-07, is an indicator of significance of the health of the economy at large. Just as the mother consumption market of them all, the United States, is about to enter a state of recession, here is this great big market that has the world`s second largest numbers of bellies and bladders (among other body parts) emerging out of its shell.

    The annual budget, which is a concomitant part of the process that goes into getting the target 10-per-cent growth number for all the five years of the XIth Plan period, is certainly an important one. This budget in particular is a good one. I am happy.

    Let me examine this joy in a dispassionate manner of involvement
    Firstly, this budget presents itself amidst the backdrop of a pathetic performance by the farm sector of the economy. The share of agriculture in the economy has declined to 18.5 per cent to date. More than half the chunk of the economy is occupied by the services sector (55.1 per cent) and another quarter is occupied by manufacturing (26.4 per cent). Although agriculture occupies only 18.5 per cent of the GDP pie, more than half the population of this country of 1.09 billion people is dependent on agriculture. Add another piece of data to it. This sector is actually growing at a measly 2.7 per cent!

    As per Chidambaram`s budget speech itself, there are 115 million farming families in India. The Indian census of 2001 further says that an average family size is 5.5 people. That makes for a whopping farmer population of 632.5 million people! These are stomachs that want insulation from the inflationary trends at large in the economy, apart from craving for the basics of food, clothing and shelter. And very importantly, let`s remember, these are potential votes that will end up sometime or the other in a ballot box for sure. One needs to prepare for that as well!

    The macro problem at hand seems to be a large one. Ignoring the problem could cause grief in both the medium and long terms. Never mind what the niche (in terms of people numbers) urban and city-centric part of the economy is saying so vocally to express disappointment.

    I do believe that this budget does not give too much to those who already have the means to achieve the entire double-digit growth rate that every Tom, Dick and Harish wants for this country. In the same breath, I do not believe this budget takes away anything that the manufacturing and services sector of the economy has, to create more of that exclusive growth of 11.0 per cent and 11.3 per cent, respectively.

    In many ways, none of the budget pronouncements have really touched the manufacturing and services sectors of the economy negatively at all. A progressive growth rate of 11-13 per cent across the XIth Plan period is indeed a possibility for these sectors of the economy, which seem to be in overdrive already.

    The real worry lies in the agricultural sector. The focus of the Chidambaram budget on this sector is completely positive and most certainly in the right direction. Let`s therefore not get carried away with all the analysis-paralysis that we have witnessed over the last several days. Remember, very few farm-sector representatives get to talk on national network television. Just because they have not said what they have to say, does not mean that they don`t have what they have to say!

    The farm sector needs it all, for sure. And this sector will lap it all up. It needs more than all this, but that`s another story altogether.

    Remember, the Union budget at large is not just one budget. It is many budgets really. There is the Political Budget. The Social Budget. The Economic Budget. The Religious Budget. The Cultural Budget. The Sports Budget. And it`s probably much more.

    One disappointment: The Retail Linkage
    I do not believe the budget has attempted to link the dynamic front-end of the market to the sluggish back-end with enough vigor. If the farm sector of India is to be taken care of, it is important to link the back-ended small farmer to the front-end of modern-format retail. As the retail sector prepares to take off in this country, this budgetary period would be the right period to attempt the start of such an initiative.

    Linking the farmer to the front-end of consumption and consumer pick-up point of modern retail is a must. This needs to be done by completely shortening the supply chain and cutting out the host of intermediaries, which add little value but gobble up precious margin