To de-stress himself from the hectic budget preparation exercise, P Chidambaram holds a party for close friends at his residence on the eve of budget day. Away from the media, he opens up and talks about what he could really do if he had his way. By Vivek Sharma
First, I must thank all of you for turning up at such short notice. My life has been so hectic since I moved back to the familiar environment at North Block, and I apologise for not keeping in touch with most of you. When Nalini came up with this idea of a Budget Eve party only for my closest friends and family, I realised how much I missed you all. Meeting you all is such a stress reliever and will fire me up for yet another dream performance tomorrow in Parliament.
Now let me whine for a while. My last job really sucked. Seriously, I mean. Just imagine dealing with a bunch of policemen every day. Within a week in that job, I told Madam and Manmohanji that this country's police force needs some serious consolidation and restructuring. Just merge all the BSF, CRPF, CISF, Indo-Tibetan and others under a single CEO who will report to me.
But they didn't listen. Then I tried my best to teach some modern management to these IPS types, and even sent a few of them to IIMA. But then Salman Khan spoiled my plans. Now every other IPS officer and recruit dreams of becoming Chulbul Pandey, even though the original Chulbul was a lowly inspector. And the few girls in that service are running scared of all the Chulbuls strutting their stuff and Ray-Bans.
Fed up, I tried to learn some jungle warfare myself to lead the fight against the Maoists. Fortunately, it didn't take me very long to realise that the veshti is not the best attire for the jungle. Even with my veshti and starched white shirt, I had a tough time winning the last election. If my constituents in Sivaganga see me in battle fatigues, I am cooked. So I was counting my days quietly, when Madam and Manmohanji decided to bring me back from the vanvaas.
When you all were constantly complaining until last year that the Bengal Babu had made a mess of my ministry, I never thought it would be this bad. Honestly, we need a constitutional amendment to reserve the finance ministry only for Ivy League graduates. If in a given year no willing Ivy Leaguer can be found for this sarkar naukri, PhDs in economics from a top-20 global university could also be considered.
This is serious stuff. Someone who cannot comprehend the difference between a Synthetic Constant Proportion Portfolio Insurance and a Constant Maturity Credit Default Swap, or at least how George Soros made his first billion betting against the pound sterling, has no business to be the finance minister of an emerging economic super power.
To be effective in this job, you have to do frequent road shows, go to Davos every year and drink decaff ice tea when it is -20 degree outside. After my recent road show in Singapore, FIIs have sent in another $7 billion. If you didn't know, that is an all-time record for any emerging market finance minister.
Now let me make my short informal budget speech. What I am going to say is what I really want to say and, obviously, you won't hear any of these from me tomorrow in Parliament.
Let me start with the big topline numbers that everyone gets so worked up with. I don't really know if the GDP for the next fiscal would grow at 6 per cent , 7 per cent , or 8 per cent . It depends. But, for the sake of my own reputation, I hope and pray that the number is north of 7 per cent , so that everyone will credit me for turning the economy around yet again.
I don't have a clue where the fiscal deficit would end up. Again, it depends. Mostly on what Madam wants to do ahead of the elections and international crude oil prices, neither of which I have any control over. Let us not even talk about inflation and what the RBI is going to do.
Subbarao was a nice chap when he was at my ministry, but has become more stubborn after moving to the RBI. Every MIT-trained economist, including Bernanke and Draghi, dream about outdoing each other on aggressive monetary easing. Subba is the only exception I know of. I wonder what he was really doing at MIT.
I always assign the Economic Survey to the more academically-oriented folk in my office. Everything in the Survey is pure hypothesis, with a bit of creative imagination. The Survey says GDP growth will be between 6.1 per cent and 6.7 per cent next year. I haven't done the arithmetic, but that is probably the simple average of the growth rates for the last six or eight quarters. I am sure the quants among you noticed that the Survey says inflation will cool to between 6.2 per cent and 6.7 per cent .
It is quite likely that they took the GDP forecast and adjusted it a wee bit on the lower end to make it look different. If I had seen the numbers before release, probably I would have corrected the upper end of the range to 6.8 per cent . No big deal, but the markets got a bit excited after the survey.
Friends, as all of you understand, budgeting should be a simple and straightforward exercise. We identify a few strategically significant projects or ventures, estimate their costs, and then figure out a way to raise enough money. If funding is not a problem, like for most of you, you could do this in the reverse. First figure out how much money there is, and then spend it on something that is fun to do. Unfortunately, we in government do not often get to do that.
But, if I had my way, I could easily set right government finances in a year. Here is an idea which will excite most of you. Create an apex holding company for all central PSUs and transfer all the shares currently held in the name of Rashtrapati to that company.
Fill the board of that company with the best known statesmen of corporate India. Ask Ratan Tata or Narayanamurthy to be the non-executive chairman of the board, preferably the former because he has more experience running an empire. Appoint a big name global corporate celebrity such as Anshu Jain of Deutsche Bank as the CEO.
Yes I thought about Indra Nooyi, but she has been a disaster at Pepsi and foreign investors would have noticed. Then do a global IPO, with the government selling 20 per cent of the company initially. That will correct the fiscal deficit, with money to spare for Madam's pet rural projects. Thereafter, the government could unload something like 5 per cent every year for a long time. Technically, as the corporate lawyers among you would agree, we could dilute up to 74 per cent of the holding company without really losing control. If there is a cash spigot, this is it.
With the cash from this mega disinvestment, I could stop worrying about revenue generation. So I will cut taxes across the board. I will also eliminate short-term capital gains tax and do away with the securities transaction tax, which I admit was a rare mistake of mine. If I could announce these tomorrow, I bet the Sensex and the Nifty would be locked in the upper circuit.
Being in the business of politics, I also have to make some noise about income inequality, sharing the burden and all that. So I will also announce a 10-per cent tax surcharge on incomes above Rs 1 crore, which many of you consider as the poverty line. Maybe also a 10-per cent estate tax when we pass on our fortunes to the kids. I am sure you would appreciate the fact that your potential gains from my earlier measures are probably 10 or 100 hundred times larger than this measly tax outgo.
In an award acceptance speech last year, I said a politician is a child of opportunity. As you all know, I have grabbed every opportunity that came my way with both hands and have delivered. Yes, I know, there is some talk about an even bigger opportunity coming my way. I wouldn't say anything, except that Nalini thinks 10 Race Course Road is a nice house.
Enjoy your dinner and stay around as late as you can. Meanwhile, I will pretend that my glass of jeera water is better than the Moet & Chandon most of you are enjoying now. Nalini even made our jeera water sparkling by adding some soda. May our lives sparkle always.