This is not a time for faith

The cardinals at the Vatican may have chosen their new Pope, the first time in the modern era when a non-European has been made a Pope - the religious head of the 1.2 billion Catholics.

And Cardinal Jorge Mario Bergoglio of Argentina has chosen the name Pope Francis - in honour of St. Francis of Assisi, a lover of the poor.

Closer to home, our Finance Minister gave his sermon on February 28 on how he sees the immediate finances of the country and what he plans to do about them.

And at the end of two weeks of speeches and explanations and expert opinions sprinkled with the usual high-praise ratings that come out of Chicken India, I have a simple question: do you have any faith in the Finance Minister and his government to ensure that the money planned to be spent will actually be spent the way it is supposed to?

The budget indicates an increase of 30% in the expenditures towards social services, education, and health - things that are supposed to help the poor. Do you believe that any of this increase in expenditure will actually reach the targeted poor? Or will it fatten the pockets of the middle-men?

Has the Finance Minister acknowledged that corruption is India's number one enemy?

And what, if anything, is he willing to do about it?

Instead, the Finance Minister and his love for the "quick-fix" have brought him back to his favourite - and only - nursery rhyme: "I hope the RBI will cut interest rates." After having denied Dr Subir Gokarn an extension of his term as a Deputy Governor of the Reserve Bank of India and having seemingly loaded the bases with another supporter of lower interest rates, the Finance Minister can bet on some action there when the RBI meets on March 19th.

The falsehoods of governments

In July 1991, Dr. Manmohan Singh - then the Finance Minister to Prime Minister Rao - correctly pointed out that "investment was an act of faith".

What Dr. Singh implied was that no amount of numbers could persuade (or dissuade) any investor from making the act of an investment - a key catalyst for the future of the seeds of growth.

The reforms that began in 1982, picked up speed in 1985 and 1987, and accelerated in 1991 brought with it a lot of faith. And a lot of investment.

But over the past decade, the UPA and NDA governments - and state governments across political parties - have been tainted by private deals, cosy relationships, and corruption. Politicians are now the problem - not the solution. They have blatantly used their position of power to enrich themselves, their families, and their friends. They have become that large worm plugged into the intestine of the economy eating away at our very core.

Every spending programme aimed for the poor is assumed to be laced with a substantial kicker of money to some middle-man.

And where there is no programme in existence - they create a new one.

A highly educated person like the Finance Minister has announced a plan to set up a woman's only bank and fund it with Rs. 1,000 crore.

Why could the FM and his team not identify existing, non-government women's organisations and give them the money to allocate the Rs. 1,000 crore? I am sure the FM has heard of SEWA set up by Ela Bhatt over 30 years ago. And I am sure he has the ability to analyse their efficiency. And, yet, rather than allow groups like SEWA (which, by the way, is focused on women) to help him reach his well-intentioned goals of helping women, the FM chose to set up a new entity! Why? Was he more interested in ensuring that the programme becomes another political football and another way to encourage leakages in the system? What a terrible idea! Another project that will be doomed to failure and manipulation.

Every big-ticket deal from spectrum, to coal, to iron ore, to gas fields, to the Common Wealth Games has the dubious distinction of a political hand somewhere on the take.

And every investigation by the CBI is seen to be manipulated for some end objective. The Supreme Court, noting the power of the government, has forbidden the CBI to hand over any information on the so-called "coal-gate" scam to the government. That is a record of shame. The Supreme Court is clearly indicating its lack of faith in the government's ability to keep information that it receives from the investigating agencies in confidence. Does the honourable Court fear that the government may, in fact, leak this information out to its friends to help them prepare a defence?

Why should we heed the government's appeal?

In an interview with CNBC after the budget, the Finance Minister noted: "I am hoping that the people of India will heed my appeal and not demand so much gold. For example, if the people of India stop buying gold for one year, that will solve most of our problems in that year."

Let me give you a counter appeal on behalf of the people of India, sir: If the politicians and the bureaucrats stopped cheating India for one year, we will solve most of our problems for the next century!

The budget is an annual statement of accounts. But within it lie stated and unstated intentions. The Finance Minister has been focused on balancing the need for spending more (in light of a general election in the next 12 months) and worrying about a possible downgrade from the international credit rating agencies. That is his balancing act: the act of a politician, not that of a statesman.

There is nothing to suggest that this government - or politicians in general - wish to address the issues facing India. There is nothing to suggest they even care about corruption. There is everything to suggest the government is happy to announce new routes of creating ways to guarantee future leakages (a bank dedicated for women) rather than identifying existing routes which can be used efficiently and effectively.

Nope, there is no faith to be wasted here.

Make sure you have your allocation to gold.

The above is from the mail I receive from Equitymaster under the heading "The Honest Truth