Budget! It’s not a Game show!

My take of yearly budget; handle it with prudence!

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Annual Government Budget has been a political show for years together but over a period it has lost its sheen and it is less of a show. When India became an independent nation, budgeting process had to be started. India as a whole, had never been a sovereign country before independence. In 1947 November, India’s first budget was presented. Of course, India was a poor country then and even now the large majority of the people are poor. But over a period, India started many industries, services, IT services was a major proponent of growth. India has a large number of farmers and farming sector, even today, it engages largest number of people. With the rapid growth in various sectors, India’s GDP is in top five nations in the world, though its per capita income is still very low, due to large population.  

As expected, India had a great difficulty in budgeting as there was nothing much in the kitty. Balancing the budget was a great art and there was always a conflict in budgetary allocations. Naturally, we started with education, India opted for large public-sector industries, big dams to help farming and to generate electricity. Then there was war with China in 1962, Pakistan 1965 & 1971 and one in 1947. With these wars, allocation started going more towards arms and ammunition. Factories were built to produce war material. Like any poor household, this strategy put stress on other sectors like agriculture, education. Private manufacturing was looked down upon and the industrialists were looked down upon as profiteers. Profit was a cuss word in those days, hence there was permit Raj and there were limits on the quantity of goods that could be manufactured. This type of thinking always led to scarcities and shortages. This further led to hoarding and black marketing. Added to this was political turmoil of 80’s. I think Bajaj Auto was the first company who challenged the government and said we will produce more scooters than the capacity, let us see what you do!

Since last ten years things have improved in India’s finances. Money is around and governments are trying to be prudent about allocations. Making a large country like India modern in science & technology, engineering, transportation, farming and defense is not a joke. Another important area is digitalization of the nation. Huge allocations are required for all these sectors.  

There is a large middle class, rich class, and biggest class is the poor class. Other than allocations for various sectors mentioned, the poor class needs to be supported in such a way that they become self-sufficient over a period of time. Other two classes have the where withal of taking care of themselves with or without Government support. This is what the government has done in the current budget. Poor will not be helped by dole or subsidies. But government actions may help this group in the most difficult areas, handling medical expenses.

Government has proposed a medical insurance scheme which will cover 100 million people in next couple of years. This scheme will cover a family of 5, for Rs.5/ lacs each. This means that 500 million people will come under the scheme. Illnesses have been one of the major factors that have ruined poor families’ finances. This scheme can take care of expenses during illnesses. Cynics will talk about difficulty to implement such schemes etc. Have you heard of something called Aadhar lately? Aadhar will be perfect tool to launch such an ambitious scheme.  

There is one more decision that will help millions of farmers. Government has covered 23 different items where farmers will get higher than today’s assured purchase price. This will help farmers, hopefully, from their current financial difficulties. There will be discussion why item A is not under the scheme but B is under the scheme. But this discussion is natural as everyone will be interested in his own well-being. But it is about people who are poor!  

But I see people like you and me cribbing that Income Tax slabs have not been improved. Come on we pay taxes; the majority who need help are those who don’t pay taxes! We worry that deduction against money spent on medical insurance is not increased. Difference is we are able to buy our own insurance, there are millions who can’t even buy it.  People are worried that iPhone, diamonds will become costly, Mercedes will be costly. Can these be even subjects for discussions? Every group of people want their pie to be improved. All want Indian cities to look like foreign cities. Only GDP increase does not do this. There should be minimum people below poverty line in any nation. Budgets now should now try and achieve this. For this all have to work together and support the Government whether it is formed by Party A or Party B!  Let political parties play the blaming game; it is their business but why you and I should be party to this?  Let them treat it as a game show in the Loksabha or outside the Loksabha!

Another thing I have observed post budget this time, is the proliferation of “Experts” being interviewed by newspapers. Since when students, housewives start giving Stars to the budget? Are they even one star in their knowledge about budget? Ask finance guys, ask people from industry, ask people in the know of it. They should be giving an overall opinion. Many real experts have opined about the effect of budget on their areas of work. Their remaining comments were general comments and not sweeping ones. What do the newspapers achieve by asking such a wide spectrum and asking them to give “Stars”? If by chance somebody had come to interview me, I would have 100% said, ” No comments! I am no expert in national budgeting”. 

Our nation is now on auto pilot for growth of GDP because of actions by successive governments. Now our budgets are what they should be, declaration of intents, allocation of funds to the priority sectors as visualized by the government in power. Let us make sure that this does not become lopsided; help poor to come out of their quagmire. Super rich will become richer without budgetary support. You and I should stop cribbing about vegetables being a little costlier, tur dal being a bit expensive. Sky is not going to fall if income tax deduction percentage is not improved. We want better India, smarter India and cleaner and neater India; let us make it all inclusive improvement. There could a little pain for a few groups, bearing it is tough, cribbing is simple. You decide what you want to do. Jaihind! 

 

Low Aim is a Crime!

This is take on being satisfied with Money earned rather than going up the value chain!

India got its independence in 1947. India missed the industrialization bus by a century because British allowed only a few benefits of industrialization to percolate to India.  Before independence educated Indians were interested in working for British, whatever work they could get, mostly they got clerical jobs; those were the only real jobs available anyway! British chose the people for senior admin positions and made them brown sahebs. These proxy Britishers were more British than the Britishers themselves.

This scenario put India under the gloom of disease of getting satisfied on achieving small things and doing mundane things. This led to metastatic mentality of under achievers; those who were trying to do something different were looked down upon and discouraged from doing anything different. Some of us from our generation were able to improve on this thought process and later generation became even more active and started taking risks.

IT sector was the first sector where India did pretty well, financially. Y2K issue was the one that gave impetus to Indian IT sector; middle class started growing faster than ever and large Indian populace started having money, living in foreign countries for work and started buying their own homes in a big way. This of course combined with official opening of Indian economy in 90’s. Effect of higher salaries in IT sector was seen in other sectors like engineering, pharma, finance and so on. But this success hid one thing from general populace and even from IT sector that the “great” work that we were doing was actually mundane work done for others as a service. This model kept on working well till about a couple of years back. Then the signals started coming that the mundane work that was outsourced to India can be automated so….

Circa 2017! Large Indian IT companies are sitting on big pile of US Dollars. This indicates their past success, financially. But it appears that these large “successful” companies were run more by accountants than by entrepreneurs! So they have made big money, hundreds of thousands of millions, many of them in dollar terms. But since the scenario started changing a couple of years back, it is obvious that if you don’t move up the value chain, you are going to come down as fast as you have gone up! The fact that these companies are sitting on a big pile of dollars shows that our mentality of mundane “services” type of work has not changed. This pile of money should not have been there; it should have been invested in going up the value chain! But even today this money is being used to buy back shares! The big bosses have not thought in terms of creating own IPR’s or products in any field, IT or Engineering or Pharma! When “services” are generating money why bother.

To give an example of how things are changing, when you “talk” to say Amazon on chat about some issues, the “Ravindra” or “Asha” who is taking to you may be a “BOT”. What is a BOT? An Internet Bot, also known as web robot, WWW robot or simply bot, is a software application that runs automated tasks (scripts) over the Internet. Typically, bots perform tasks that are both simple and structurally repetitive, at a much higher rate than would be possible for a human alone. The largest use of bots is in web spidering (web crawler), in which an automated script fetches, analyzes and files information from web servers at many times the speed of a human. More than half of all web traffic is made up of bots. (This is Wikipedia definition of BOT)

How this is typically done is very similar to self-check-out counters in big departmental stores. At these check-out stations, for a group of ten such stations there is one supervisor helping, if you need any help. So what this system does is, instead ten people manning ten checkout stations, one person is sufficient. These BOTS also do the same thing. Now do you understand how the nature of business is changing? If your business is dependent on someone else’s way of working, you are in trouble if automation comes into picture.

What is the way out? Going up the value chain; but if you are a company with 100 to 150 thousand employees with “service” level skills you have tough task on hand. Basically it’s a tough call for the senior management to change its own ways from accountant based running module to technologist based running module. Who runs highly successful companies? Apple, Facebook, Microsoft, Google, Nvidia, you just list such companies and will see that these are technology driven companies. Yes, finances are very important but if the company is run by accountants they will never take risks! But when you don’t take risks and try and don’t keep abreast with new technologies or create new technologies, you will never know what hit you! How many of us know that Google and Apple are spending big money on Car technology, and they are creating newer technology in cars which was never even thought of. Nvidia is already a big auto system vendor to VW’s, Audis and Mercs of this world. They have invented technologies which are forcing these Auto giants to use new technologies to remain competitive in business. Elon Musk of Tesla had the audacity to start making Electric Cars and even start making space vehicles using venture capital.

Of course there is silver lining to each dark cloud! The surprise is that the silver lining is coming not from private sector but Government sector. ISRO, Metro projects implementation, Solar Energy project implementations, highways all over India are sign of we Indians have started getting hang of the situation. On IT side one of the success stories of product selling is Tally ERP. Yes it has sold hundreds of thousands of copies and is unquestionably India’s “Numero Uno” product on IT side! If Tally is doable why can’t others do it? India is the largest democracy and is the only country in the world where all elections use EVM’s- electronic voting machines! Paper ballots are Passe’ in India! The EVM’s were developed by C-DAC! Aadhar card is one such initiative that has become pride of the nation! All these projects indicate that we are slowly coming out of the Chalta Hai mentality! Chalta Hai is a phrase indicating Small achievement is good enough! We should have Sachin Tendulkar’s in each field then only we as a nation can start achieving things!

So friends we started with discussion about Indian mentality of being happy with whatever little is achieved! Will our giants survive the onslaught of market changes? They have the money but do they have the wherewithal other than money? Do they have the mind set? Do they have the technological willpower to go up the value chain? Going up value chain is real hard and smart work. I hope these giants do it, but we are still discussing US H1B visa rules, which is the backbone of current business model of sending people on site to provide services! I hope our current young generation and future generation are as audacious as Elon Musk!