No Proof Required

This is India’s Shining Decade

By

Surjit S Bhalla

(Business Standard, Dec. 26, 2009)

Blurb:   The new decade will likely belong to India; when will this reality be recognized by Indians?

End of the year, end of the decade. Time for assessment, rumination, and forecasts. And if it is the year after the greatest financial crisis, what else can the forecast be about than GDP growth?  Oh yes, it could be about climate, but after hope and Dopenagen, that assessment can wait.

Two key conclusions emerge about Indian GDP growth. First, that this growth is now at a plateau level of 8-9 percent. Second, that very soon, analysts and punters will have to change their Word documents to “India is the fastest growing economy in the world” rather than, “excepting China, India is the fastest growing economy”.

There are three separate reasons for this, all of which have been outlined numerous times before in these columns (and a detailed assessment was provided in Bhalla(2007)*). The reasons refer to the broad determinants of economic growth – capital, labor, and productivity. On the first, India is investing at the same rate as China (approximately 40 percent of GDP), on the second, India’s labor force growth is about 1.8 % per year faster than China, and on the third, China has outpaced India by about 2 percent per annum (for the last five years). Most of this outpacing has had to do with the deep and deeper currency undervaluation practiced by the Chinese authorities. Which led to two unsatisfactory outcomes: the great financial crisis of 2008, and now the largest and fastest growing polluter of the world. For how long will the international community stand idly by? Not very, and this is the first big forecast for the ensuing decade: China’s exchange rate will appreciate significantly starting 2010. How significantly? A first year appreciation to about 6 yuan per dollar from the present 6.8 level.

This scenario will have predicted effects –  China’s GDP growth should moderate to a less polluting 8.5 percent in 2010 and then proceed on a declining trend for the rest of the decade. This will mean jobs for the rest of the world. The other side-effect of the China growth rate decline will be on carbon emissions. They too will decline, and allow China to reduce its carbon intensity of output to at least the world average.  In stark contrast, India does not have pressure from the world community to mind its currency or its emissions. The productivity growth advantage of 2 percent a year that China presently enjoys will soon disappear leaving India with a GDP growth rate in excess of China, and in excess on a sustained basis.

I realize I am going out on a limb, because no one has even dared to project India to grow at even the same rate as China  – and I am saying that India exceeds the China growth rate as early as 010 (as it happens, this is the exact year forecast in Bhalla(2007)). But I have good fortune on my side – my forecast of 8 % plus for Indian GDP growth for 2009/10 (made on  April 18 2009, V – Shape of Things to Come, Business Standard) got an “endorsement” from India’s finance minister, Mr. Pranab Mukherjee  when just yesterday he claimed Indian growth could top 8 % this fiscal year.

What Indian policy makers have not realized, and their counterparts around the world, especially China, do recognize, is that what international organizations say affects perceptions of the world, and affect our own negotiating positions. Take for example the assessment of poverty in India. We keep coming out with poverty lines and expert committee reports whose only terms of reference is to increase the rate or poverty to somewhere around 80 to 90 percent (why they don’t reach 99 percent poor is a mystery). China, on the other hand, refuses to let the Asian Development Bank even mention the word China in its poverty assessment report for all of Asia (presumably, China is situated in Europe).  China does not ask for money for climate control, and Jairam Ramesh gets berated for sacrificing India’s interests by not begging for more aid.

As you mistakenly perceive yourself, so do others. For example, the IMF comes out with  “respectable” forecasts of GDP growth for China but, low ball estimates for India. [Haven’t you heard - India has 50 percent poor, China does not have any poor]. The first low attempt by the hallowed (hollow?) institution was 4.5 percent GDP growth for 2009. Recognizing the error of its ways, the IMF has revised this forecast sharply upward to 5.4 percent. For 2010, the forecast is even higher at 6.4 percent; presumably, that comes with an admonition that the Indian economy is overheating.

The IMF is in Washington, and its thinking is still respected by many government officials. But one might justifiably ask, a la the Joker, “Why so Low” for India? In a revealing contrast, the IMF forecasts for China are a lot closer to reality, and at least 3 percentage points a year higher than those for India. And here am I, ordinary mortal, daring to contend that GDP growth for India will be higher. Goliath vs. David ?

But the IMF is in good company – in India. We have more than a smattering of the nattering nabobs of negativity (in homage to the recently departed William Safire) to supplement the dark IMF view. Most notably, practically everybody outside of Oxus, Ministry of Finance and the Planning Commission is targeting weak GDP growth for India (should make the poverty investors at the World Bank and the UN very happy). All of this was all too apparent on Nov 30^th, when GDP growth figures for July-Sept. 2009 were released. The official estimate for year-on-year  growth: 7.9 percent (Oxus’s seasonally adjusted annualized rate calculation: 11.5 percent). Most forecasters, (including the prestigious PM Council of Economic Advisers headed by former Central Bank Governor, C Rangarajan)) had an estimate of growth a full 2 percentage points lower at 6 percent. It is not easy to get a forecast that far off. Especially interesting was the excuse made by most for getting it all wrong – Oh, the drought effects of the summer Kharif crop were not factored in. But the last time the Kharif crop got harvested by September was in historic cooler climes of a few hundred years ago.

This has been  a structural change decade for India. Sadly, this reality hasn’t quite seeped into the psyche and mind set of a large body of Indian policy makers and opinionratti’s. This should, will, also change in the new decade.   

*Bhalla, Surjit S., Second Among Equals: The Middle Class Kingdoms of India and China, May 2007, available at www.oxusinvestments.com; revised version, forthcoming 2010, Peterson Institute for International Economics, Washington, DC.

The author is Chairman of Oxus Investment; all the past articles (and forecasts)  are available  on  www.oxusinvestments.com .

No Proof Required

China CO2 cut – Much ado about nothing?

By

Surjit S Bhalla

(Business Standard, Dec. 8, 2009)

Blurb: A detailed comparative analysis of countries that have promised cuts in emissions shows that China is promising a near zero cut over business as usual.  

It is well understood that vis-à-vis climate policy, every country must do what it is in its own self-interest - and in the interests of the world community. As preparation for the Copenhagen climate talks, and as a sign of commitment, at least 11 countries/regions, had announced emission cuts for 2020. Unfortunately, the promises come in all sizes. The European Union has promised a cut of 20 percent from the emission levels prevailing in 1990; the Brazilians have a larger number – 36 percent cut – but the fine print states that it is from “projected levels in 2020”. Indonesia has promised a 26 percent cut but from “forecast trends”. US announced a paltry cut of 17 percent from 2005 levels, and China signed on with the biggest promise of all – 40 to 45 percent cut, but this cut was stated in intensity levels i.e. the ratio of CO2 emissions to constant GDP in 2020 would be 40 to 45 percent lower than the same ratio in 2005. India has just joined with seemingly a much lower cut - 20-25 percent  over 2005 levels in 2020.

Predictably, and lamentably, the response of “expert commentators and climatologists” has been along well worn Cold War lines. According to the dictates of this ancient wisdom, anything that the West does, especially US, is suspect; anything that the developing country set does is “good”. Thus, the 17 percent cut by the US is denounced as pitiful, while the Chinese cut is hailed as the emergence of the “Brave New Order”.  

But maybe the Cold Warriors are right. The only way to establish the veracity of the ancient warriors is to convert all promises onto a common scale. Because of high physics that is involved in the climate debate (are the glaciers really receding? Is the temperature really high?) the assumed assumption is that simple numbers about emission cuts are really intractable. Else why would senior ministers engaged in possibly the most important decision regarding our lives go to such lengths to obfuscate? Agreed that negotiations are involved, but the fact remains that data pertaining to emissions and output and trends are readily available for most countries of the world.

There is a straightforward method to convert all promises into a common metric. There is a reasonably tight relationship between CO2 emission and GDP. It is different for different broad ranges of income, but a good fit nevertheless (for the econometrically inclined, the R-squared is close to 90 percent). Assuming a trend rate of growth in GDP can yield broadly agreeable estimates of GDP till 2020. These growth rates are likely to be close to 8 percent for both China and India, and close to 2.5 percent for the Western world. Thus, one obtains estimates of GDP and CO2 emissions for 2020, estimates that all reasonable women can agree on. There is one further twist – what about technical change, where technical change is defined as gains in the CO2 intensity of output? Here again, past trends are a useful guide for the future. Reductions in intensity have been near universal for the last 20 years, and over the next 20 years, with heightened sensitivity and increased policy action, reductions in this intensity will be larger, hopefully much larger, than those observed to date.

Assuming the past trends in technical change is therefore a conservative assumption. With this input, one has all the data one needs to compare all of the commitments. Given that past is past, what the whole world will watch is what happens in the future – in 2020 or whatever the target date. The table reports each of the committers and explores their commitments. Columns 2-4 report on emissions for 1990, 2005 and 2020; columns 5-7 the intensity of emissions i.e. ratio of emissions to GDP (in constant 2007 PPP $ - the choice of a constant series does not matter); column 8 is the targeted intensity of emissions in 2020. Column 9 is the Chinese metric i.e. percentage decline in intensity in 2020 from 2005 levels.

Contrary to the impression that China was offering the most cuts, it is offering the least – and by a wide margin. China is promising to cut the intensity of its emissions by only 10 percent from the level that would have happened anyway. And as mentioned above, this is according to no change in conservation policies over the next decade – an unrealistic assumption. In English, China’s offer is that it will contribute zilch to the CO2 reduction over the next decade. If the world’s biggest polluter is offering this as its negotiating position, then Copenhagen is dead on arrival.    

The star performer is Norway with a promise of a 60 percent decline. Contrary to the impression in the media (especially Cold War media), the European and American positions are near identical – a 20 or 18 percent reduction in intensity. Australia, Brazil and Japan are clustered around the high 30s reduction or a promise whose worth is almost 4 times that of China. India’s announced reductions of 20-25 percent means that it’s promised emissions in 2020 amount to almost a zero amount of burden sharing. But note the fact that India’s emission ratio, at 19 in 2020, is among the lowest in the world and almost half that of China. Clearly, the giant twins have less in common than commonly believed.

Contrary to China’s official position that “developed countries must shoulder most carbon emission cuts” (a position followed meekly by leading developing countries, including India), it is the case that the developing nations are promising cuts about three times the level promised by China. The moral of the story – don’t jump to conclusions about a cat just because its color matches your ideology. Look at how many rats (CO2) the cat can catch.

Table: Deconstructing Targets for CO2 Emission Cuts in 2020

Notes: (1) 2020 numbers are forecasts based on trend assumptions.

(2)  Intensity of emissions is the ratio of CO2 emissions (in kg)  to GDP (in 2007 PPP  $) multiplied by 100.  Total PPP GDP in the world was 67 trillion  in 2005, and CO2 emissions 26 billion tons yielding an average intensity of 0.38 or  .38*100 = 38. 

3) The target for 2020 is the official target of CO2, however stated, converted into intensity in 2020.

4) Burden sharing: This is the “sacrifice” that each country is making when it announces emission cuts – it is the percentage decline in intensity of output from business as usual estimates of intensity (estimate of emissions in 2020 as a ratio of GDP in 2020).

This article is part of a paper “Climate Change – What’s  it all about and what is to be done” , forthcoming and available, with past articles,  at  www.oxusinvestments.com.

No Proof Required

India: Need for Change in Climate

By

Surjit S Bhalla

(Business Standard, Nov.7, 2009)

Blurb: India should heed the Aesop dictum: “Be careful what you wish for, lest it come true”

The Environment Minister, Mr. Jairam Ramesh, struck several chords when he suggested, via a leaked letter to the PM, that the time had come for a gear shift in India’s policy towards climate control. The traditionalists roared disapproval, and the climate control negotiators seem satisfied that order was restored. But there just might be more to the leaked letter.

I find it hard, perhaps impossible, to believe that the letter could have been written without the PM’s consent. The reason? Assume for a moment that the A climate team decides to change its view. How should it, how can it, change a major point of view?  An obvious choice is a leaked letter. This way no one has responsibility;the Pandora’s box gets opened, the old can of worms disperse, and the policy gets changed. So, in my scenario, the whole change in policy was planned!

And for good reason. The old policy had outlived its usefulness, and it was somewhat inappropriate for a new world order, and a new India. There were two pillars to the old policy. First, the developed countries caused the problem in the first place, so it was their moral responsibility to clean up the atmosphere and to fund the developing countries in their efforts. Any connection between the “moral” argument and the hackneyed, and obsolete, arguments of the “non-aligned” movement is not coincidental. Many had believed that India had graduated from moral posturing, but alas, that is (was?) news to our climate team.

It is true that developed country growth, since the Industrial Revolution, has been a cause of climate change. But this growth occurred at a time when there was zero knowledge in the world that industrial growth would cause the problem. Even Einstein had not commented on this aspect. So how can anyone be held accountable? Now the specious argument is often made, primarily by Indians, that ignorance of the law is no excuse. But we are not talking about any law here; by definition, when a law is formulated, the nature of the crime is known. In the case of the climate change, the ex-post crime was not a crime; indeed, it was an ex-ante virtue. Indeed, that is what development and poverty reduction is mostly about – gains in per capita income, and gains traditionally came through intensive energy use

The second foundation of India’s climate policy rests on its pledge to never exceed the per capita emissions level of the developed countries. In 2007, India’s per capita emissions were 1.2 tons per capita, just one tenth of the average for the developed countries. The Indian position seemed like a “no brainer” a no cost commitment for the future. While there may be an argument for changing our outdated moral stance, there seemed to be little reason to change the “commitment not to exceed” etc. Then why the attempt by the government of India to change its stance? The argument made by the traditionalists (paradoxically, in India most traditionalists are of the left persuasion) is that Jairam Ramesh was caving in to pressure from the West, especially America.

When in doubt, kick America and you cannot go wrong. And though it might change, America is the bad boy on climate change, along with India’s major non-aligned ally, South Africa. But India’s commitment is not to exceed the developed country average, which at 11.7 tons/capita of CO2 emissions, was only 60 percent of the average for the US (19.1 tons/capita). Even then, the commitment not to exceed a level ten times as large seemed “reasonable”. Not really.

The popular misconception is that emissions are proportional to per capita income. Not so. The rate of change of emissions per capita with respect to income per capita is less than unity. This occurs because as countries become rich, they move out of industry and into services; the latter is much less energy intensive. For example, a Wall Street trader needs precious little energy input besides a broad band. An automobile factory needs considerably more energy. So as the US moves out of car production and India moves into car exports, the energy uses of the two economies will tend to converge.

The importance of this convergence is illustrated by the figures in the Table. For 2007, actual data are reported; for 2025, the UN population projections are used along with forecasts of growth in per capita income. These forecasts are based on the growth experience of each country over the last five years 2004 to 2008. The world figures are the aggregates of  about 140 countries. The model explaining emissions per capita (time-period 1990-2007) has the following explanatory variables – (log) per capita income, the square of this to capture non-linearity, the size of the middle class and the size of the rich class.

The model does not incorporate any explicit emission control policies, something that most parts of the developed world are committed to. The figures are for a “business as usual” situation. And in this scenario, India’s per capita emissions rise to 7.4 tons/capita by 2025, very close to the global average and about half the developed country average of 15.2 tons/capita. But note that this is a business as usual model; the Europeans are committing themselves to an 80-95 percent reduction from 1990 levels by 2050 and a 30 percent reduction by 2020. In 1990, the developed country average was 7.5 and in 2007, 9.0. A thirty percent reduction of even the latter figure would mean that the CO2 emissions from developed countries will be less than 5 in 2025 (5.25 in 2020). India, at that stage, with growth and development and reduction in poverty and a high moral quotient will be at 7.4, almost 50 percent higher than the developed country average!

No matter what the assumptions, or the math, or the model, the traditional Indian policy towards climate change is untenable. This is perhaps what the “leaked” policy was trying to convey. It is time the traditional climate establishment saw the writing on the wall. 

First things first. In RBI’s  semi-annual  monetary policy announced yesterday, Governor Subbarao did not put a foot wrong. And he got several feet right.  The policy marked a departure from traditional RBI approach in several respects. There are two criteria by which the policy can be evaluated.  Was what was done appropriate? Was what was not done correct? Let us examine both.

What was not done: The RBI kept the repo rate, and the CRR level, unchanged. This doing nothing policy best illustrates the likely new approach at the RBI. The monetary hawks were out in force, and echoing the demands of their compatriots in the developed world, contended that India must begin to rebalance and hike interest rates. After all, Israel and Australia had shown the way, and the RBI must also follow. Our repo rates were at lows induced by the crisis and this imbalance had to be redressed. If the RBI had followed, it would have struck a false note. Why? Because India’s monetary policy should not be about matching what other countries have done, or are doing. Each country’s monetary situation can be different.  Prior to the crisis, India had one of the highest real interest rates in the world.  If what Australia does is relevant, why weren’t our rates reduced in 2007?

One long lasting impact of the financial crisis of 2008 is likely to be a new real interest rate approach to monetary policy in India – all for the better. According to this approach, real interest rates in India were inordinately high in India prior to the crisis. Adjusting back to those levels is neither desirable nor appropriate.    For too long Indian policymakers have followed a biased and mechanical monetarist policy in setting interest rates. If money supply growth was just one percentage point above the assumed target, rates were hiked.  A good monetarist respects symmetry, but that is not what the RBI did in most of its post-reform  history. If money supply growth was below target, it said it needed to cool the ostensibly overheated economy and/or to cool inflationary “expectations”.  If above target, wham. No more. Reading between the lines of both the review of the economy and the policy announcement, it now appears likely that the money supply growth policy indicator will go the way of the telegraph. In this email world, sooner is not soon enough. But better late than never.

What was done: The RBI increased the SLR requirement from 24 % to 25 %, and raised the risk weight on loans to real estate. The former would fall in the category of “tone”; prior to the crisis the SLR was 25 %, so we are back to “normal”. However, since banks are already depositing close to 27 percent (lazy banking again?), this policy will have zero impact on monetary tightness. There is enough, and appropriate, noise about the possibility of asset bubbles, especially after the crisis of last year. If central bank governors do not genuflect to pricking of asset bubbles, they can be accused of not caring for the poor!  There are two kinds of policies which can be used for ex-ante bursting, and in the past, Indian policy makers have followed both i.e. selective, targeted, policy at a sector, and a general across the board increase in interest rates. The latter policy is akin to swatting a fly with a sledge hammer – all that happens is that the glass table shatters, and the fly escapes to the wall. My personal view is that as a rule, policy makers should beware of pricking asset bubbles; but in extreme situations, when the weight of evidence is overwhelming, then targeted policy of the kind used by Subbarao (and also used by Reddy earlier) is appropriate.

What about inflation?  A significant pointer to the “no raise in rates” policy was contained in RBI’s  macroeconomic review released a day earlier. The RBI was at pains to make two valid points: first, that consumer price inflation stayed at elevated levels, and stubbornly so. Second, that most of the inflation that had occurred over the last year was due to food price inflation. Indeed, the gap between WPI manufacturing inflation and overall WPI inflation has been the highest in recent memory. To be sure, central bank governors have to be concerned about inflation; but there is no law of economics that says that monetary policy tightness can address drought induced inflation. So not to attack windmills was another rightful RBI step.

The drought is behind us, and so are elections. The government can now get back to managing the economy rather than managing political campaigns. It is reasonable to expect that food price inflation has run its course; given the slack economy worldwide, it is also reasonable to expect that demand side pressures will take a while to emerge. So the future of inflation looks much better than the past. Given this expectation, a hike in rates to counter inflation and/or to anchor “inflationary expectations” (read I don’t know what causes inflation but the headline number states that it is there!) would have been highly inappropriate, if not downright wrong. Another right RBI step.

The RBI has faced criticism over the years from the single objective advocates. According to these post-modern monetarists, a central bank should only consider a single objective – controlling inflation or “anchoring expectations” presumably whichever comes first!  According to these modernists, exchange rate should fluctuate with supply and demand, and growth should be left to take care of itself. The RBI has consistently distanced itself from narrow economics, and Subbarao continues this tradition. Where I differ with RBI is in their forecast of economic growth; only 6 percent they say, while I maintain that we will end fiscal year 2009/10 with a growth rate closer to 8 percent. But this difference does not translate into hiking interest rates because Indian GDP growth would, even at 8 percent, be somewhat lower than the potential growth rate of around 9.5 percent.  If so, then don’t look for the repo rate to move much beyond its present level of 4.75 percent, though the reverse repo rate might be expected to close the gap (presently the reverse repo is at 3.25 percent).

Blurb:  Don’t get misled by the schizophrenic stock market – Budget 2009/10  is a very good Budget, among the two best since 1991.

It is relevant to understand the background to Budget 2009/10. Hope and despair is how I would describe it. Hope because the government finally had a political mandate, a vote much beyond its own optimistic expectations. “No more excuses” was the Congress’s future. One would now know for sure whether the Communists within the Congress party really held sway over policy decisions. Five years of inactivity can dull anybody, and the Congress was getting geriatric in every possible way. Good men, bad ideas had turned into formerly good men, worse ideas.

But in a flurry of pre-Budget activity, came some announcements. The government was not averse to financing leaky public expenditures (note that I don’t say the fiscal deficit – more on this later) by selling shares in government owned companies. Salman Khurshid, the minorities minister, made some very intelligent noises about the need for affirmative action - and the rejection of reservations, in education and jobs. The education minister, Mr. Sibal, announced his intentions of transforming the education sector. Now I think that one national exam is a terrible idea, but he is to be applauded for admitting that the education system is broke, very broke. More than repair it needs reconstruction, and Kapil’s pronouncement was a genuine uplifting of the reform spirits.  Next, in a signal that the government finally will begin to concentrate on leakages in delivery of social services, Nandan Nilekani was appointed as czar to bring in a unique identification card for all citizens – honestly, to serve the poor better. Then before one could say Wow the government announced its intention of scrapping Article 377, a law which defines homosexuals as criminals. The law is even older than the Congress party and the fact that it had continued to exist was more than shame for our much vaunted democracy.

But before one could say Hooray, the government started to backtrack. Religious sentiments are hurt and other nonsense was used as an excuse. The Communist conservatives in the Congress (C ³ for short) in charge again? What possible loss could the Congress suffer by scrapping Article 377? Didn’t the party realize that it was voted in because it was considered the “liberal alternative” by a large segment of the population, by a large proportion of the young and bulging middle class? As events turned out, we will never know the answer but for its own benefit, and future, the Congress party should scrap within it those that favored a business-as-usual cautious attitude towards long overdue reforms, social or otherwise. 

Prophetically on the same day,  July 2^nd , 2009, the  Economic Survey and the Delhi High Court came to the rescue. The Ministry of Finance’s own document on the economy came out of the closet with a wide ranging analysis of the Indian economy – and a comprehensive listing of needed reforms. Quite easily the best Economic Survey ever produced in India (in style, presentation and content), this document gave optimism a good name. The Court did what the C ³  had pushed back – it made homosexuality legal. India was back on track; did one dare hope for Budget day?

Hope was rewarded, despair contained. The budget speech brought in some potentially major reforms in a by the way manner. Fertilizer subsidies would  now be nutrient based; the farmer would finally get the subsidy rather than inefficient government and private companies. Great for the economy, and the farmer, and bad for fertilizer companies. Decontrol of oil prices, after a study group meets and decides (a formality in my opinion), is another mega-reform.  But the reform moves don’t stop there. There is a 45 day limit on coming out with a “new” tax code, a tax code which will stop the obsession of Finance Ministers (and juniors in the Finance Ministry) to constantly tinker with tax rates, not to mention the plethora of cesses, surcharges and other taxes bordering on the fringe.  Plus the GST is on schedule for April 2010; most expected this to be pushed back to 2011. So a major tax reform, direct and indirect, over the next year. Fringe Benefit tax was abolished, and service tax imposed on lawyers, a community that the previous finance minister, a lawyer, had self-indulgently exempted. An undoing of past mistakes, without apology. So both on tax and expenditure, major initiatives and intent, Budget 2010 is a winner.. What else could one have hoped for from the Budget, which after all is a tax and expenditure statement?

What about the fiscal deficit? What about it? Compared to the interim budget, subsidies are higher by 10,000 crores; the overall fiscal deficit is up by 0.1 percent, from 6.7 to 6.8 percent.  Even the fiscal vigilantes should be cautiously happy. And did anybody seriously expect the fiscal deficit to be brought down in a recession year? How pray do you do that – by raising taxes so that you get even less revenue? By lowering expenditures so that you get even less growth?

There was one genuine disappointment – the Budget failed to give a figure for disinvestment. This was not at all unlike the Congress attempting a fudge on Article 377. It failed on that count – it will fail on this fudge too. The government can always argue, correctly, that it can bring disinvestment into policy anytime. It most likely will.

An economist’s steering hand is visible;  Budget 2009/10 has a well thought out reformist touch. Previous UPA budgets had meandered, lost purpose, and too consumed by high economic growth which they did nothing to make happen.  In a welcome departure, this Budget proposes, and intents to deliver, a full set credible second generation reforms.  All in all one of the best budgets I have seen in a long time; actually among the two best Budgets since 1991,  with Sinha’s BJP 1999/2000 budget, and not the so-called dream budget of 1997, being the other very good Budget.