At the traditional meeting of the finance minister with economists, I addressed the issue of how the budget should be assessed once it is delivered. I suggested a simple yardstick — if at the end of the budget presentation, there was even a single person comparing the BJP-Modi-Jaitley budget to the UPA budgets, the FM should consider himself to have failed. So how did the FM perform? To be sure, there were the Congress apologists and prisoners of “political opposition” who felt compelled to say this was a bad budget. From my vantage point, the fact that the opposition to the budget was fatuous is further proof that this maiden Narendra Modi budget was path-breaking and pro-growth in many respects.
However, I must mention that at the end of the first 45 minutes or so of the speech, I did comment: “What is the difference between the BJP and the Congress?” There was the usual laundry list of items to be done, the usual cookbook approach to the harnessing of ingredients — Rs 100 crore of coriander added to Rs 300 crore of rice, etc. A recommendation to Jaitley, and one I have been making (without any success) to every FM for the last 20 years: please don’t mention anything in the budget speech unless its value is more than Rs 1,000 crore; and please adjust it for twice the inflation rate for the next 10 years.
The difference between Jaitley’s budget and the UPA budgets is not in the presentation (bad in both), but in content. The BJP budget talks about investment, and how the investments necessary for enhanced growth will be financed, how the cost of this financing has to be, and will be, substantially reduced, for example, no CRR and SLR requirements for infrastructure investments. The UPA budgets, in contrast, talked about how, by giving rights to all, of all kinds, including happiness, they would end up by delivering everyone misery. That is the difference between Modi-Jaitley and Sonia Gamdhi-UPA — and vive la différence!
Now for the good news, organised according to the wish list of many.
On retrospective tax, promise of no future misbehaviour but lack of clarity on what to do about tax crimes already committed by the (previous) government. If the spirit of this budget is taken, and indications taken from promises about the future, then the grade is 8/10. But objectively, 5/10.
On fiscal consolidation, there is only a promise to overhaul the inherited, bad subsidy regime. The FM said: “I also propose to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalised, poor and SC/ STs. A new urea policy would also be formulated.” …continued »