Stop, Start Or Go?

How does one fill in the gap if MAT has to go? What should be a favourable investment message that Prime Minister Gowda has promised in the Budget? If Budget deficit for financial 1996-97 is actually more than twice the estimate (according to Reserve Bank of India), what changes in the coming Budget will set things right? The list could go on...

These are just some of the doubts that must be behind finance minister P Chidambaram's sleepless nights. Economists may reiterate that so far as the markets are concerned, the main aim of the FM should be to try and stabilise the market and bring back the dynamism witnessed a couple of years back. Easier said than done. Why? Budgets, in any country, have more to do with political climate than balanced economic growth. And rarely do the two point in the same direction. And there are several reasons why Chidambaram could be biased towards announcing measures that find political support and ensure the continuity of the government.

 

On the other hand, if one were to support pessimists who believe that this could be Chidambaram's last Budget, the counter-argument could be that the FM would be market-savvy and put his best foot forward in the coming Budget.

Whether we will have a political Budget or an economic one, only time can tell. But it is clear that the finance minister has some tight-rope walking to do