Devangshu Datta: 'The Rs 100-crore Budget'

There was a lot of hope abroad that Mr Jaitley's first Budget would be known as the 'Rollback Retrospective'. Alas!

Landmark budgets, good or bad, are associated with buzzwords, or catchphrases. The desperate 1991 mid-year policy review is often referred to as the "NEP Budget". That was when Manmohan Singh articulated the New Economic Policy that triggered liberalisation.

Dr Singh's first full-year Budget in 1992 is called the "Long India" Budget by old-timers, who recall Harshad Mehta's ecstatic response. The Big Bull bought everything, admittedly with money that didn't belong to him.

The 1997 Budget is remembered as the "VDIS Budget" by market operators. It included a black money amnesty - the Voluntary Disclosure of Income Scheme. (Friends and admirers of P Chidambaram sometimes refer to it as the "Dream Budget".)

The 1998 Budget by Yashwant Sinha, the first one of the first National Democratic Alliance government, was described by Mr Sinha himself as a "defining moment in history". It came in June 1998, scant weeks after the Pokhran-II nuclear tests. Sanctions were just starting to make an impact.

This is generally recalled as the "Swadeshi Budget". Mr Sinha's speech was a little repetitious. I remember it as going something like "India Rising, blah, blah, blah, Swadeshi, we shall raise customs rates, Swadeshi, blah, blah, raise excise rates, India rising, Swadeshi". The Sensex dropped a new notch as every new rate hike was announced.

Mr Sinha was forced to roll back some imposts, such as a urea duty hike. But it is his 2002-03 Budget that will be forever remembered as the "Rollback Budget". Poor Mr Sinha had to roll back half a dozen Budget proposals or so: LPG cylinder price hikes, income tax on information technology (IT) export earnings, tax on dividends in the hands of recipients, etc.

That "Rollback Budget" ushered in an era of rollback. The Budget proposals became a basis for negotiations between special interest groups and the finance minister of the day. In the subsequent decade of the United Progressive Alliance's rule, Mr Chidambaram rolled back proposals to tax IT and iron ore exports. Pranab Mukherjee rolled back General Anti-avoidance Rules, or GAAR, guidelines for tax avoidance. Mr Mukherjee also had to roll back a proposal to impose service tax on healthcare, if I recall correctly.

However, rather than being remembered for his series of rollback, Pranab-babu will be remembered for something else. His last Budget in 2012 will always be called the "Retrospective". That rather cynical tax legislation was introduced after the Supreme Court ruled in favour of Vodafone.

There was a lot of hope abroad that Arun Jaitley's first Budget would be known as the "Rollback Retrospective" with the new government axing that legislation. The chances of a big jump in foreign direct investment flows would have been enhanced. However, Mr Jaitley is one of the best lawyers in the business, and he must have sound reasons for letting that legislation play out.

There were several more creative ways for Mr Jaitley to tap alternative financial resources. He might have contemplated a new amnesty scheme. Shiploads of cash came into India for the elections. Some of the donors of that cash would be happy if they could declare it and park it in productive assets, such as infrastructure bonds.

The legalising and taxing of soft drugs has been a big theme since several provinces in the United States decided on it. Colombia, Mexico and other Latin American nations are also following this route successfully. This would also have slotted in well with the Hindu cultural ethos so beloved of the Bharatiya Janata Party. Government shops sell bhaang and opium; they could sell charas and ganja as well. Alas, this wasn't destined to be the "Ganja Budget". Alternatively, the legalisation of sports betting could have been a new source of revenue and made this the "Match-fixing Budget".

All those opportunities were missed. It seems most likely that this Budget will now be immortalised in popular memory as the "Rs 200-crore Statue Budget". Or maybe, it will be recalled as the "Rs 100-crore Budget" because of the many token allocations of that size.

Twitter: @devangshudatta