India Insight

(Any opinions expressed here are those of the author and not of Reuters)

The countdown to Budget 2013 has begun, and Finance Minister P. Chidambaram must try to keep India’s fiscal deficit from gaining weight.

One idea we’re hearing a lot lately is turning to India’s super-rich citizens to boost tax revenue and improve the tax-to-GDP ratio. In a television interview aired in January, Chidambaram’s comments on the subject didn’t reveal much, but led to media speculation over higher taxes for the well heeled.

It’s a step that may lead the Harvard-educated lawyer down a path that John Morton took more than 500 years ago. The 15th-century lord chancellor in the court of the English King Henry VII, not to mention former archbishop of Canterbury, is traditionally credited with “Morton’s fork”, a taxation principle that ensnares the rich and poor alike.

It goes like this: frugal people must have enough money left over to give generously; people who live extravagantly must be prosperous enough to give generously too.

It’s too bad for Chidambaram that his name isn’t Morton. He will find it harder to get India’s millionaires to put their money to work for the good of the state.

Days before Finance Minister P. Chidambaram unveils India’s budget for the next financial year, the online team at Reuters India conducted an informal survey of more than 200 people to learn what they expect from the 2013 budget.

In a poll conducted between Feb. 8 and Feb. 20, we asked 10 questions on issues ranging from India’s fiscal deficit to income taxes. At the time of publication, 205 respondents had shared their thoughts about India’s biggest business and economic event of the year.

Not everyone is confident that Chidambaram, already credited with saving the country from economic ruin once, will deliver. Forty-four percent of the respondents said that the budget will be geared toward pleasing voters, while 17 percent thought that it would contain harsh measures to help fix the nation’s economic problems. Thirty-nine percent thought that Chidambaram would find a balance.

The annual budget is a big event in India, but ministers’ speeches on the budget can be mighty boring. From Shakespeare to Bollywood, ministers have used all kinds of popular and esoteric sources to make their points. Whether that has helped is up to you. Here are a few examples from recent years:

President Pranab Mukherjee is a veteran Congress politician and has presented the last four budgets. His favourite authority to quote has been Kautilya, the great Indian pioneer of economics and politics who was prime minister in the court of King Chandragupta Maurya in the fourth century BC. Mukherjee quoted Kautilya in his first budget speech in 1984 and as recently as in 2010.

Thus, a wise Collector General shall conduct the work of revenue collection … in a manner that production and consumption should not be injuriously affected … financial prosperity depends on public prosperity, abundance of harvest and prosperity of commerce among other things