It is not often that budgets are drafted on the back of favourable tailwinds. The UPA did not make use of these while benefiting from an unprecedented growth boom during much of its tenure. Finance Minister Arun Jaitley, too, had the advantage — this time of low international oil prices, moderating inflationary pressure and, most important, a global investor community enthusiastically cheering from the sidelines. But his Budget seems to have let these winds blow by.
Nobody expressed the disappointment better than Yashwant Sinha, Finance Minister during the previous NDA regime, which had to battle a far more hostile domestic as well as global environment through the late 1990s to the early 2000s. “He (Jaitley) missed an opportunity. This is far from a big bang budget”, Sinha told The Indian Express.
Sinha felt that the real miss in Jaitley’s budget was the lack of thrust on housing. This was a sector that had received a particular boost from Budgets in 2000-01 and 2001-02, taking into account its huge multiplier effect for growth, employment and demand for everything from steel to cement.
“At the least, there should have been an increase in the exemption limit for interest on housing loans from the current Rs 1.5 to Rs 2 lakh”, Sinha pointed out. Fiscal sops to housing would, moreover, have worked well at a time like now when interest rates, too, are set to fall.
The other big disappointment from the Budget has been the inability to address the issue of untargeted and open- ended subsidies. Just a day after the economic survey had talked about leveraging the “JAM trinity” — Jan Dhan, Aadhaar and Mobile — to replace subsidies with Direct Benefit Transfers, the Budget offered little by way of a concrete action plan in this regard.
Jaitley’s speech didn’t make even any mention of food and fertiliser subsidies, which were left at the same levels as last year. Only the petroleum subsidy is expected to be around Rs 30,000 crore lower in 2015-15 — but that’s thanks only to lower global oil prices.
Not touching subsidies meant that not only the fiscal deficit, but even the revenue deficit for 2015-16 is going to be higher than that in the original consolidation time table.
While lower corporate tax rates are welcome, Sinha nevertheless felt that this should have been balanced with some incentives for the middle class. Instead, the increase in service tax rates, coupled with a Rs 3/litre-plus hike in petrol and diesel prices immediately after the Budget, have left a bad taste, he said. Nor has the Budget announced anything on labour reforms – which again was attempted first in the NDA budget of 2001-02.