Surgical, Purgical and Mergical Strikes in the Indian Budget

The surgical strikes carried out by the Indian Army have taken the imagination of the country by storm and rightly so.

In the meanwhile, “Surgical strike” has become the absolutely new buzzword in town. Such is the lure of the word that Chetan Bhagat has immediately decided on his new book: Surgical Strike-Point-(at)-Someone. The fellow is simply incurable.

Newshour has declared 8 weeks of Surgical Strike analysis and apparently been calling up Pakistani politicians furiously to book their dates for the period. This single-handedly has caused dizzying levels of relief for Indian politicians, who for the first time in many days, feel completely free to make idiotic statements and mini-scams without fear of being grilled by the One and Only. The PR team of the UPA scion’s Kisan Yatra is said to have collapsed amidst mingled tears of joy and relief. The Kisans though, are on the run.

B-Schools, tired with meaningless terms such as “leveraging marketing strengths to enhance ground zero” are simply overwhelmed by the discovery of such a powerful new word. Harvard Business School has now officially included a new strategy in the corporate mantras: The Strike with a capital S. Bewildered students are now being asked to “leverage marketing Strike potential to enhance ground zero”. Financial Management Journals, which hitherto described “Strike Price” as the price at which a security can be purchased due to an option, now also include the definition of the “Surgical Strike Price”. This is the price at which security can be enhanced when no options are left with us anymore.

Amidst such corporate celebrations, however, the FM has been sulking. Had he known the term before, he could have leveraged it to enhance ground zero, errr, to highlight main points of the fiscal policy. How? Well, getting the GST passed was no less than a surgical strike, was it? To trump the Opposition in LS elections so as to get the majority in the Lower House, and then to diplomatically isolate them by highlighting their attempts to stall the Bill, was just the start. And then, those incessant sessions with the State Committees to understand the sticky issues and accommodate the sensible demands. Hadn’t he too, spent sleepless nights, before the passage of the Bill?

Take the case of removing the Plan – Non Plan design of the Budget.  For the first time, the Budget will be presented, way before its usual February date, without the usual priorities as suggested by a Five Year Plan. The Budget accounts will only be classified into the Revenue and the Capital Accounts, with zero mention of the legendary Plan and Non-Plan Expenditure classification. To remove the influence of the Five Year Plan from the Budget as well as do away with a separate Railway Budget has been no mean feat; a “purgical” strike, anyone?

Hmmm. And that masterstroke of creating the Monetary Policy Committee (MPC), while at the same time allowing the Governor the autonomy of a casting vote. He had simply changed the dynamics of the game; now there would also be growth combatants together with inflation warriors within the RBI. He had successfully merged growth objectives with inflation management, and how! “Oh, I should have called it my “mergical” strike” he thought wistfully.

Of course, the decision of the MPC, in its very first policy review, to slash rates has not gone down well with all economists. Dr. Rajan, the erstwhile Governor shuddered delicately in Chicago, when quizzed about his reaction to the rate cut. “It’s more of a “splurgical” strike,” he said. “A classic case of too many cooks spoiling the Booth.”

 

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Playing by the book

Dear Reader,

Hi! Did you know that the FM had tied up the state of the Indian economy sub-consciously to the performance of the Indian cricket team in WC T2o? 😛

Well, here’s the relationship between fiscal deficits and cricket! The piece appeared today in “Tweakonomics,” a column on econ-humour I write for the Hindu Business Line. You can read it at http://www.thehindubusinessline.com/opinion/columns/playing-by-the-book/article8429549.ece, else read it here directly.

Enjoy! And do send in a comment or two!

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Fiscal targets and Indian cricket

Many an eye was left wet and leaking in that last over of the India-West Indies semi final, as the six hit off-Kohli rocketed into the stands. Chartered Accountants, many of whom had created internal deadlines of 6 p.m. on March 31 just so that they could watch the match were particularly indignant about the whole thing and were left vengefully thinking how cricketers could possibly be taxed more.

But no eye watered and no nose sniffed harder than that of the FM, who had somehow tied up the state of the economy with the fortunes of the Indian cricket team in T20s.

The FM too had cricketing aspirations, when a young wisp of a boy. However, as the years passed, the bye-laws began beckoning more sharply than the leg-byes, after which he decided to give a bye to that leg of the aspiration.

The many fascinations of allocation, distribution and stabilisation functions of the fiscal policy overtook those passions of batting, bowling and fielding. The classical version that Tendulkar played seemed almost “normative”; how cricket ought to be. It was rapidly getting replaced by “positive” cricket; higher speed, higher octane T20 cricket with crazy looking shots getting titled the Pallu shot and the Helicopter shot. Cricket, in which what ought to be, got replaced by what is.

Rather like the changes which happened to the NDA in the political arena. After a few years spent in taking interesting jibes at how governments ought to function and budgets ought to be, here was the NDA, now being asked to perform the helicopter shot. That the PM took this literally is another ball-game. And the FM found himself talking to the media not about how the budget ought to be, but about what it actually is.

And he made his pitch, like Captain Cool. As Team India strode as favourites into the World Cup T20 series, the FM felt his spirits rise. Yes, we shall deliver as promised! The UPA may well raise its delicate eyebrows, but fiscal deficit will be contained at 3.9 per cent!

To be defeated by 47 runs by New Zealand was such a shocker; no one had expected NZ to exhibit such form! The FM’s tummy churned unpleasantly. The last he’d felt so stunned was when RaGa had demanded a cap on taxes to get the GST passed.

With that Bill not getting through, the taxes wouldn’t show the expected buoyancy in the next fiscal; but the boys were back in the field laden with the expectations that only an India-Pak match can bring on, looking as buoyant as ever. And what a win! The emotional high of the moment could only bring on fond memories of the HR Minister decimating a cowering Opposition with tears and a voice shaking with high drama. We will not only do a 3.9 per cent fiscal deficit this year, we’ll also do a 2 per cent next year, thought the FM, high on positivity.

And to see Virat Kohli take on the Aussies was to believe that we’ll deliver a balanced budget next year! Zero per cent fiscal deficit target; ha, take that, you disbelievers!

Against WI, Virat and Dhoni’s batting was like watching the markets rise. Chris Gayle fell, as will the repo next month. But what’s this? How could we lose? By 7 wickets! The FM’s hand shook as he took a call from the CSO. “Sir, even if Kohl sector is up, we’ve real bad news. Fiscal target looks difficult because we’ve overspent.” The FM sighed. We’ve overspent by 7 per cent.

Yoganomics!

Dear Reader,

This article appeared in the Hindu Business Line under my column titled “Tweakonomics.” You can see the article directly at http://www.thehindubusinessline.com/opinion/knotty-problem/article7339329.ece. Enjoy!

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Sigh! This International Yoga Day is really getting to the economists. The closer it gets, the more hassled they look.

And now that it’s here, even as the world celebrates the uplifting art and science of the body and the mind, the economists will be seen frozen in a corner, with numb bodies and dumb minds. Why, you may ask. Why, you may wonder. Why, you may well say with that snooty indifference which only muggle non-economists can have.

It’s simple. Our hopes stand crashed. We were told that Yoga is the most generic solution to any problem, personal or interpersonal. But we have been conned. And we are now sore as hell. Because it looks like Yoga does offer solutions to all types of issues, so long as they are not of the economic type. The UN Secretary General Mr. Ban Ki-Moon (BaMo) says that the singular act of getting the tree posture (Tadasana) right gave him that “simple sense of satisfaction” of having set the world right. Just try getting that GDP series into the tree posture.

So, imagine, how Baba Ramdev would react on seeing the GDP growth series. OMG! That would be like seeing a seriously distressed patient, with pathetic levels of energy. “Anulom Vilom!” The commanding voice will bark and while all 3500 participants at the Nehru Stadium will demonstrate the sharp intake of the breath, the GDP series will give out a huge sigh and continue on its way out of the stadium, looking more depressed than usual.

Send in the WPI. Hell lot of negativity all over. The Ramdev solution? Immediate pranayam to get the positive vibes back into the series. The entire RBI is now breathless doing Pranayam for the past 6 months, but WPI hain ke manta nahi. Perhaps the right thing is to get the Arabs into Pranayam mode, so that they’ll not swamp the markets with crude.

And just look at the exchange rate series. Like a temperamental artist, it goes all over. It’s so volatile, surely Yoga can help us to calm down this hyper energetic model? “Padmasana!” says the Master. The Lotus will help to stabilize the exchange rate. Really, now. Ahm, that’s too politically correct, isn’t it? No, let the exchange rates dance their zumba.

Baba will have to really think when he sees the interest rate though. Firstly, there’s a schizophrenia issue. Sometimes, the series is a repo, at times it can convert itself into lending rates, and sometimes it dons on an international personality like the LIBOR. “Shavasana!” The posture of the dead body. The classic remedy to calm down mental issues. But surely, we can’t afford a lifeless interest rate, can we? They have been in a dead state in Japan for nearly 15 years now and still the gloom persists.

Further, this is a series that is not in great form physically either; it’s seen too many surgeries for its own good. It is sometimes raised to a great height and pegged to a target and then slashed. Hmm, post-surgical Yoga. Tricky, this one. But no problem. We have a solution, says the Master. “Ardha Titaliasana!” The butterfly posture. But that is recipe for chaos theory. Fluttering of a butterfly in Indian banks causing a storm in businesses, you see. Thanks, no thanks!

Bring in those tricky blighters. The fiscal deficit and public debt. The sweetmeats you consume everyday and the total added up weight of the body. The diagnosis is immediate. Obesity. “Shirshasana!” The headstand. And view everything upside down, eh? And then you’ll claim that economists are freaks and need Yoga to calm down.