Former Finance Minister P Chidambaram wished his successor Arun Jaitley well on his first budget, “despite its shortcomings”. Chidambaram refused to elaborate on these, but Jaitley has chosen to avoid the politically tough decisions — be it disinvestment through strategic sale, labour reforms or scaling down of subsidies.
Jaitley’s party colleagues — within and outside the Cabinet — had bold ideas. Road Transport and Highways Minister Nitin Gadkari had suggested doing away with income tax, and NDA’s former finance minister Yashwant Sinha had proposed slashing government stake in public sector banks to 33 per cent. Rajasthan Chief Minister Vasundhara Raje went a step ahead as her Cabinet amended three critical labour laws to give more flexibility to the industry.
Jaitley has chosen to tread more cautiously. He has postponed major tax reforms — Goods and Services Tax (GST) and the Direct Tax Code — kept quiet on labour laws despite the need to create more jobs and avoided even mentioning disinvestment in his Budget speech.
Corporate India, just like every year, has lauded the Budget. The stock markets were undecided through the Budget, but finally closed 72 points down. The Budget has avoided administering Prime Minister Narendra Modi’s “bitter medicine” prescription for “acchhe din” in the long term.
Jaitley has budgeted Rs 58,425 crore as disinvestment receipts, but these would be raised by selling government shares to citizens and selling government stake in companies such as Balco. In public sector banks, Jaitley has categorically said the government would hold majority stakes. He announced 49 per cent FDI in insurance, a move opposed by his party when in power.
Given a strong mandate — the BJP won 282 seats in the Lok Sabha elections — the expectations ran high. Reducing subsidies by doing away with administered prices for petroleum products was a measure for which Jaitley could have specified a time frame. He said the government would overhaul the subsidy regime and make it more targeted, but did not talk about reducing the outlay.
“Welcome to the real world,” said Chidambaram, complimenting his successor for shunning the election rhetoric about the economy.