With a run-of-the-mill budget, an overcautious finance minister appears to have frittered away a historic opportunity to change the way India does business. Given that the bold gamble of demonetisation has paid off in more ways than one could foresee, the FM could have rewritten the way India’s economic administration works. Those who suffered the pains of demonetisation had high expectations of the government that it would spell out the gains. The budget however seems to completely ignore these expectations and the FM has gone on as if nothing had happened in the past few weeks. He has chosen to produce a mere accountant’s statement of income and expenditure with a little tinkering in direct and indirect taxes. This is more disconcerting when we see the world around us changing rapidly with the US threatening to rewrite global economic rules and threatening India’s economic interests in sectors like Information Technology. The minister could have taken this opportunity to show support for this crucial sector that brings employment as well as precious foreign exchange.
The FM has laid out an expansive vision of well-being for India’s villages and youth. His 10-point plan for doubling farmers’ incomes in five years, skilling youth for appropriate jobs, strengthening the social safety net, promoting digital economy, etc., are well known political goals of the ruling party. What his plan lacks is clarity on how these economic goals will be achieved, or even on how far we have progressed on this path. There are some gains for pockets of the economy. For instance housing and construction sectors seem to have been handpicked for creating employment and generating rural growth but there is nothing new here, really.
There is a welcome attempt at trying to bring some transparency in political funding, but several loopholes still remain and it seems that a lot more effort will be required to achieve the desired results. There is the usual talk of promoting rural jobs through enhanced MGNREGA allocations and boosting funds for irrigation, farm spending, crop insurance and education. However, sadly none of these represent any fresh ideas or change in the wasteful ways these have been implemented in the past. Interestingly, stock markets seem to be euphoric about the budget. That’s more because the FM chose to do nothing rather than doing anything that could hurt investment sentiment. There were widespread apprehensions that the government might decide to milk the capital markets for more revenues. However, the minister rightly decided not to kill the golden goose. Government hopes to raise significant amounts through disinvestment next year and any short-sighted moves on taxes on capital gains could have tanked those hopes. No news was good news in this respect. In any case, this year’s budget exercise underlines its declining importance in our economic calendar. The merger of the railway budget with the General budget too points to the intention of making these exercises more routine, rather than one-off major events. Overall this seems to be an opportunity missed.