The Ides of March

The meeting between a soothsayer and Julius Caesar is famously dramatized by Shakespeare in his play when, having foreseen Caesar's death, the soothsayer shouts out "Beware the Ides of March!" Caesar of course ignores the warning and is murdered by his senators on 15 March. Ever since the Ides of March - 15 March as per the Roman Calendar – has been imbued with a sense of foreboding. It is but a quirk of fate that this year's Union Budget will be presented by Finance Minister Pranab Mukherjee on 16th March, a day after the Ides of March.

The meeting between a soothsayer and Julius Caesar is famously dramatized by Shakespeare in his play when, having foreseen Caesar's death, the soothsayer shouts out "Beware the Ides of March!" Caesar of course ignores the warning and is murdered by his senators on 15 March. Ever since the Ides of March - 15 March as per the Roman Calendar – has been imbued with a sense of foreboding. It is but a quirk of fate that this year's Union Budget will be presented by Finance Minister Pranab Mukherjee on 16th March, a day after the Ides of March.

So will this be the Ides of March for the UPA government?

Not having the gifts of a soothsayer, I can't predict what the Budget will be but then you don't need to be one to know that it’s a make-or-break budget for the economy and a government tottering from one crisis to the other.

The policy paralysis has been crippling, the leadership muddled and the economy on a slope downward not seen in years. The government's own finances are in a mess and a slowing economy means there is no surplus for social security schemes. Already, there is talk of a staggered rollout of food security to keep subsidies under check and a hike in excise and service taxes to shore up government coffers. 

But can the government afford to hike taxes when the economy is slowing and inflation continues to remain stubbornly above the government's comfort level of 5 per cent. The government's target of getting Rs 40,000 crore from disinvestment has remained a pipe dream and oil prices continue to rise, especially with Iran’s belligerence, meaning that the oil subsidy bill will only rise.

Some say the elections in Punjab, Karnataka , Uttar Pradesh and Uttaranchal could be crucial. Victories in some of these states and a good performance in Uttar Pradesh could finally embolden the government to take crucial decisions such as hiking oil prices and allowing FDI in multi brand retail.

On the other hand, such a win could have exactly opposite effect, prompting the government to be more profligate by rolling out more welfare schemes and try and fulfill delivery of sops promised during campaigning in preparation for the general elections in 2014. 

There are no clear answers yet but as we get closer to the Budget, I will try and explore what the government can do to avoid Caesar's fate – key policy decisions which need to be taken and revenue generating options other than taxes like the upcoming spectrum auction which may help the government get some hard needed cash. Watch this space.