There’s a buzz in the air this time around, every year. The delicate scent of money. Is it anticipation, hope, nervousness, excitement, anxiety or plain FOMO. The corporate executives, academicians, traders, students and the populace in general are expected to go through planned emotional turmoil. I am not even appalled at my lack of interest in Budget this year. Not that everyone should have, just that handling Finance courses adds extra pressure. After going through few budget reviews by experts, my enthusiastic me started pushing my reluctant me to buy the ticket for Circus.
After a certain age, there exist two yous in you. There is never an outright winner of choice. Movie vs a resting back. Excursion vs comfort of bed. Funky food vs clunky restrain. Gym vs jogging, jogging vs brisk walk, brisk walk vs saunter, saunter vs just the thought of it. The good part of reaching that stage of life is one can derive moderate satisfaction from any of the available choices rather than to go for broke on a particular choice. This happens for only one reason; we have matured to distribute the opportunity costs in an equitable way. The joy of one choice just about covers the opportunity cost/s of other choice/s. No more, no less. So you have effectively converted your joy from a luxury good to a commodity, flipping from one to other does not create cognitive dissonance and that is so so liberating! I decided to exercise this choice of flipping.
I pondered over the budget snippets I skimmed through. The focus appeared more on consumption. The income in the hands of people through revised tax slabs and higher standard deduction was going to widen the fiscal deficit. The Budget is an aggregate of capital budget and revenue budget. The fiscal deficit is the gap that exists between total receipts (does not include borrowings) and total expenditure and for our economy it is timeless like Marilyn Monroe’s beauty. Revising the tax slabs surely strains the revenue receipts, the government is still non-committal about cutting down food subsidies, part of revenue expenditure. Revenue expenditure, unlike capital expenditure is regular. Assuming that Government is not reducing these subsidies, GST hike look imminent to bridge this widening gap. This will put Government on the defensive for increasing investment and the associated capital expenditure. It has provided token measures of adjustment of tariffs on imported goods and support to the MSME sector, impacts of which are hazy and indecipherable as of now. As if the limelight was to be firmly kept on consumption.
I discussed my observations with Alex. I summed it up as decent but not forward looking, tough decisions on populist measures were needed and now! He listened to it thoughtfully and agreed with a throaty and extended ‘Hmmm’. I continued that, a sustained investment push from Government would be a much needed boost to the manufacturing sector. He agreed to it with another ‘Hmmm’, but this time the sound was slightly distant. I turned around and found him blissfully sitting on the floor, scratching his ear with the right paw. That ‘Hmmm’ was for the satisfaction of relieving the itch. But he concurs with most of my opinions on matters related to Finance.
I switched on the TV. The journalists were seeking opinion from anyone who wished to speak. The tax slabs revision was the common and in fact, the only topic of interest for most. Wealth advisors were optimistic that more funds in hands of investors would make their way to the stock market. Real estate firm owners believed exemption of tax on rental income of second home would spur the demand of residential properties. Film stars were happy because everyone was happy. Politicians on the Government side described it as ‘pro-people’, those on the opposite side labeled it as a complete failure. Except for few business promoters, most lacked the objectivity and capacity of assessing the Budget with their myopic, self-centered views. Channels have a knack of interviewing emaciated, harried and tired people as representatives of common man on Budget day. Chubby, well dressed and livelier people cannot convey the same emotions to the audience. I switched off the TV.
The carnival will soon wrap up and everybody will get on with their lives. I checked on Alex. He was asleep with his mouth curved slightly up, as if smiling. Don’t you dare taunt us, I rebuked, in my mind.
Prof.Avinash has interest in equity and derivatives markets. His interests also include trekking, visiting new places, reading books and writing articles on varied topics of his interest.