Later today, the Finance Minister will present the Vote on Account in parliament. By convention, a vote on account should have no new qualitative changes, whether in revenue or expenditure. It should just be a quantitative change, a three month mini budget that replicates the twelve months of the last budget. However, this is just the convention and not the law so it's pretty unlikely that the UPA government will be able to resist the temptation to go vote-buying.
In any case, unlike last year's budget, the weight of the fiscal deficit is off Mr. Chidambaram' shoulders now. From this day onwards, whatever happens to the fiscal situation is the next government's problem. The UPA can distribute some final bit of largesse with far greater abandon than it could in the last budget or two. Of course, its likeliest that we'll just see some grand announcements of things that cannot or will not actually be implemented.
Still, it's highly unlikely that anytime soon, any budget maker will be acting in order to do something truly useful--like come up with a good plan to actually encourage productive financial savings. Our savings habit is regressing alarmingly. Not only are household's saving less, gold and real estate appear to be forming an even more dominant part of the savings basket. Savers like to acquire certain quantities of these two and the fact that they are both a lot more expensive than they were a decade ago means that they spend a larger proportion on them.
What's worse, what passes for financial savings is also of the least useful kind--that of deposits that earn less than the inflation rate. A bulk of it amounts to lending to the government, either directly through the various savings schemes or through banks from where the government expropriates a large proportion. Meanwhile, we have an equity market which, out of all emerging markets, is the most dependent on foreign money. Domestic money has all but disappeared from the markets and doesn't look like coming back.
All in all, this is a pretty depressing savings environment. Is there any improvement on the horizon? I'm not betting on it.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
