Kanika Datta: Perceptions of the Budget

SWOT

Every year, like media companies all over India, the offices of Business Standard convulse with activity on Budget day. Despite the government's retreat from large swathes of economic activity, the government's annual accounts remain, after general elections (and occasionally cricket), one of the most intensely reported events in India.

Outside of the business dailies, the attention is quite out of proportion with the magnitude of the event. Even the annual accounts of the world's largest economy, the US, doesn't receive such extreme attention from its domestic media nor does the President's State of the Union address (under Bush it's been renamed the State of Delusion address).

Budget coverage has more to do with the 24X7 needs of TV companies. Indeed, the finance minister of the day now subjects himself to a same-day televised press conference plus multiple TV interviews afterwards where he says almost the same things all over again (unless the interviewer has taken the trouble to do some research). Then he meets industry associations over the next few days and repeats himself yet again.

Industrialists and businessmen are no less busy making expansive statements on air or sending "reactions" crafted by corporate communications departments to the newspapers. Lesser-known aspirational businessmen also submit "reactions" quite unbidden with plaintive requests to "please publish the same" in our "esteemed dailies".

All in all, if you were a visiting overseas businessman, you'd be forgiven for thinking that this was a momentous event for India. It may or may not be depending on who you are. It is certainly considered significant by governments and not just because it involves money. There are few other occasions when a representative of the ruling party can talk for as long as he pleases in a forum as routinely rowdy as the Lok Sabha (interjections during Budget speeches are usually expunged).

Unsurprisingly, and in spite of 16 years of economic reform, the Budget remains a quasi-political document. This year's Budget was transparently election-oriented and the finance minister all but made a campaign speech after announcing the biggest farm loan waiver in fiscal history. He expressed a "deep debt of gratitude to farmers" "" a statement that departed from the printed speech. He also appealed to "Honourable Members "" as well as to the people of India "" to give their unqualified support to the scheme and help government implement this momentous decision". In short, vote for us.

The irony is that most of this bypasses the aam aadmi. Despite increasingly generous handouts, government schemes hardly touch poor people or transform their lives. The middle class salariat cares only about income tax and businessmen and entrepreneurs are interested in the tax regime.

Income tax and direct and indirect tax proposals are contained in what is known as "Part B" of the Budget speech. Maybe it's a sign of the government's ignorance about its electorate that Part A of the Budget speech, in which every finance minister drones on about the state of the economy, the government's achievements and outlays for various schemes, is always much longer than Part B.

This year was no exception: 23.5 pages of Chidambaram's 30-page Budget speech that took roughly two hours to deliver (including interruptions) were devoted to Part A. Part B, which contained some significant changes in direct and indirect taxation, was delivered in just about 20 minutes.

The Indian media's annual frenzy over the Budget is at odds with the quiescence of the global media. Manmohan Singh's seminal 1991 Budget and the industrial policy that was announced the same day "" undeniably turning points for India "" went virtually unreported. This was to be expected since India was hardly in the global reckoning then.

Today, despite India being the cynosure of global investor attention, the Budget attracts minimal major international coverage. On Friday, only BBC and the Financial Times had the news on their websites about an hour after the Budget but neither led with it in their Asia sections. The fact that China's one-child policy might be scrapped attracted much more interest as did easing capital controls in Thailand. Xinhua, the Chinese agency, had no word on India at all in the business section of its slickly produced English website, though it ran items about Thailand (Thaksin's return) and some obscure development in Australia.

Six hours later, there was fresh excitement about Beijing's mammoth new airport and a brief mention of the Budget in the Wall Street Journal. China's one-child policy still reigned among the top stories. And Xinhua still had nothing to say about its biggest global competitor.

Yet a month and a half earlier, the launch of Tata Motors' Nano, the world's cheapest car, received saturation coverage on every major news website. This was partly a result of the Tata group's PR machinery, but as much because of the achievement itself

The message is clear: it is the private sector that is moving India up the value chain of perception. Government budgets will continue to excite only the news-hungry domestic media.