Expectation is a strange animal. The more you beat it, the stronger it rises. Consistent underachievement is perhaps the only way to kill it.

The finance minister has reportedly initiated the process of the formulation of the Union Budget for financial year 2020-21. In the process, the minister shall be taking inputs from various stakeholders, including industry and trade associations, bankers, economists, financial market participants and consumer interest groups.

In the past, this exercise generally raised the expectation levels of various stakeholders. However, considering the inherent contradictions in the expectations of these varied interest groups, the actual budget provisions have generally failed in gratifying all of them.

I have tried doing the same exercise in the past couple of weeks, and assessed the following:

(a) Middle-class households want more money in hand

- Lower income tax; higher rate of interest on savings; lower EMIs; more subsidy on utilities like electricity; public transport and healthcare; lower GST on consumer goods; and substantially better physical infrastructure (roads, sanitation, water, electricity, railways, airports, etc.)

(b) Industrialists want ease of doing business; which means - less compliance; easier and cheaper credit; lower taxes; protection from market competition, especially global competition; easier access to foreign capital; and easier, faster and cheaper access to technology, physical resources and markets.

(c) Foreign investors want less compliance; no taxes; freedom to move in and out (convertibility); and easy labour, land, competition and environment norms.

(d) Slum-dwellers want proper houses; free electricity, water, sanitation, healthcare, education, insurance and cash subsidies.

(e) Farmers want no taxes; free and better access to markets; free electricity and water; higher MSPs; and more input and infrastructure subsidies.

(f) Market economists want 1.5 percent fiscal deficit; lower interest rates; moderate inflation and higher tax to GDP ratio.

(g) Development economists want relaxation in FRBMA fiscal deficit targets; higher public expenditure; universal basic income; higher crop prices; protection from global competition; higher small savings rates and wider and deeper financial inclusion.

Obviously, no one wants to pay higher taxes; face global competition; or stringent compliance; etc. Naturally, most of them shall feel disappointment and a sense of frustration. The question is who will foot the bill, if everyone enjoys the dinner and leaves.

It is critical to assimilate that expectations of the direct stakeholders in the financial markets obviously stand at cross-purpose with the interests of the broader population. Hence, it may not be politically or economically expedient for the finance minister to meet most of these expectations. Failing would though lead to dismay and delusion that usually reflects in panic like selling in markets leading to the destruction of wealth for most.

It is pertinent to note the following two verses from Chapter 2 of the Bhagavad Gita in this context:

ध्यायतो विषयान्पुंसः सङ्गस्तेषूपजायते। सङ्गात्सञ्जायते कामः कामात्क्रोधोऽभिजायते॥ २-६२॥

When a man thinks of objects, attachment for them arises; from attachment, desire is born; from desire arises anger.

क्रोधाद्भवति सम्मोहः सम्मोहात्स्मृतिविभ्रमः। स्मृतिभ्रंशाद् बुद्धिनाशो बुद्धिनाशात्प्रणश्यति॥२-६३॥

From anger comes delusion, from delusion the loss of memory, from the loss of memory the destruction of intelligence; from the destruction of intelligence he perishes.

Various stakeholders in the Indian economy, especially the investors in financial markets, need to internalise this divine wisdom and manage their expectations to avoid disappointment and frustration.

Vijay Kumar Gaba explores the treasure you know as India, and shares his experiences and observations about social, economic and cultural events and conditions. He contributes his pennies to the society as Director, Equal India Foundation.

Read his columns here.

First Published:Dec 17, 2019 6:00 AM IST