Rail Budget 2013: Why the Railways needs a tariff regulator

By : Shanti Narain
Last Updated: Tue, Feb 26, 2013 05:01 hrs
India, B'desh bridge distance with expansion of railway network

If and when I am made finance minister of the country, I will request my Prime Minister to trifurcate the post into FM (politics), FM (economy) and FM (markets). I will be happy to let go the first two, taking charge of the third and the most exciting portfolio, of FM (markets). I wouldn't even want to know who handles the other two. FM (markets) has a great job description. What the market needs and what the finance minister has to do is often crystal-clear. I don't even need to think what I have to do.

Economists and fund managers are all over the papers giving me descriptive instructions. I don't even need to sell what I have done. Every step I take will be branded as reform. If I cut any tax payable by market participants, then it is tax reform. If I move ahead on new taxes for segments other than the market, it is called critical reform. Such luxuries are not available if I am handling economy or politics. Often, the effort taken to kickstart the economy ends up kicking up the inflation curve. Steps taken to provide employment to rural people end up creating scarcity of labour, hitting agricultural production.

Similarly, it is very difficult to predict which way the political wind will blow. Often, the situation is damned if you do and damned if you don't. Even the newspapers are not very kind. Which is why I prefer to be FM (markets). So, here is what I will do for the markets in this Budget.

According to the recommendations of the Shome Committee, short-term capital gains tax will be done away with. To make good the loss of revenue, a transaction tax on commodities will be introduced. The fund managers have not been able to bring back inflows despite an increase in fees and commission allowed recently. They have been blaming the rally in gold and the real estate boom. I will introduce transaction tax on both gold and land. The mechanics of this will be worked out. All this should be enough to take the Sensex to where it has never gone before. I will then take a trip abroad and people will stop short of calling me a rockstar, who makes FIIs go weak on their knees. If money comes in, I will take all the credit; if it doesn't I will blame FM (politics) and FM (economy). Even the blame for not doing enough in the constituency, for not creating enough jobs and all other sundry blames will go to my esteemed colleagues.

Funnily named foreign analysts working for intimidatingly named, almost bankrupt foreign banks will hail me as a dream merchant, reformer par excellence and what not. Just to keep the locals happy, I will remove all restrictions on Rajiv Gandhi Equity Savings Scheme (RGESS). One rupee or one crore, first time or hundredth time, whatever you put in RGESS will be exempt from tax. It is the markets, stupid.

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