Dear Mr. Mukherjee: A Shout-Out for India Budget 2010

Please find below a very good write up on our budget ........

Dear Mr. Mukherjee: A Shout-Out for India Budget 2010 by Paul Beckett

Respected Sir:I haven't had much time to digest your speech but I think you did a good job in both the tone and the substance.

Well done updating the Gandhi you invoked for your compliments to Sonia from Indira (can't hurt when you next say "Ciao" to you know who either, eh?)

And well done putting some specifics out there on how you see the budget deficit declining in the next three years.

We were looking for that, what with the Fiasco in Fetaland, and you delivered some credible targets. It won't surprise you to know we will wait to see your numbers achieved before popping the expensive bubbly but we'll definitely chill the cheap stuff. This is very welcome news for Indian and global investors concerned about which way the deficit has been going recently.

Focusing on trimming individual tax rates to continue the consumption boom was politically clever. It also should give you some cover for that other necessary step which, no doubt, you heard some grumbling about at party headquarters: raising the excise duty and hiking petrol prices.

With summer coming on, I might mutter something unpleasant about you under my breath when I hand over a few more bills for a new air conditioner. But I won't really mean it. And you needed no greater example of the merit of your petrol price hike than the bizarre behavior of your friends across the aisle.

Jumping up and shouting at you before walking out doesn't exactly portray them as a credible alternative government, does it? Let me rephrase that: portrays them as an even more incredible alternative to government. Nice invocation of your constitutional requirement to keep going with the speech, by the way.

"The opposition walking out over the fuel hike was embarrassing," Pramod Bhasin, chief executive of Genpact told me when I asked him his reaction to your speech. Even though you didn't extend his industry's tax holiday, Pramod still liked what he heard overall, too. "It was an excellent budget," he said. "They are finally trying to tackle the fiscal deficit.

"I did want to ask what the deal is with punting your game plan on the overall national debt out another six months, when you're going to produce a report. Did I hear that right? I hope that deadline doesn't slip or that it is not a way for you to dodge a tricky issue when you have the nation's attention. Given the rest of what you said on debt, I'll give you the benefit of the doubt for now.

A year's delay for the Goods and Services Tax also is a bit of a shame. And I must have been distracted when you mentioned the timeline for further liberalizations in insurance, the media and retail, as well as an ambitious plan of public divestitures. You did lay those out, right?

Right?
Oh.

Anyway, that doesn't detract (too much) from your creditable performance. It was good to see that funds for your Mahatma Gandhi Busywork program didn't increase by 144% again, even if they did rise a bit. And it looked like you have shifted your focus somewhat to programs that actually encourage responsible behavior and give people some tools to make their own progress in life.

An expansion of the national pension program to workers in the unorganized sector with a little nest padding from the central government is a good long term step. As is expanding the number of financial institutions and pushing their reach into the furthest corners of rural India. Giving farmers better access to affordable credit is a much better idea than forgiving them loans.

I know you're busy with all those pesky reporters who now want you to talk more when you must already be talked out, so I'll wrap up. I think the stock market's bullish reaction pretty much sums it up, especially on a day when GDP growth came in lower than people were expecting. Your speech seems to have trumped that statistic, which is no mean feat.

In closing, I wanted to make sure you saw a GDP note from Robert Prior-Wandesforde, an economist at HSBC. One of the reasons that he says the number was underwhelming was because of a reduction in government spending in the last three months of last year. He says it fell 10.3% year-on-year, having been up nearly 27% July to September. That may have brought down the big number to 6% but it's good to see that the belt tightening already had begun well before you stood before Parliament. Gives us confidence that what you said this morning you really meant.

Sincerely,
Paul Beckett .....He is the WSJ's South Asia bureau chief, based in New Delhi