FROM THE EDITOR-IN-CHIEF
After the audacious demonetisation, I was hoping the government was in the mood for some more audacity in the budget. Sadly, it was not to be. Not that it was a bad budget. It was a good one, but it didn’t satisfy my own zeal for more radical change. Finance Minister Arun Jaitley was like a good schoolboy who does a fine balancing act to keep the teachers happy and also be the most popular boy in school. The economists were ecstatic that he maintained fiscal prudence, even while increasing capital expenditure on infrastructure by 25 per cent. He pleased the masses with a combination of tax cuts and higher spending, particularly in transport and rural infrastructure, which should have a healthy multiplier effect and spur consumption. The cut in personal income tax rate from 10 per cent to 5 per cent in the lowest tax slab will raise disposable incomes, while a record budget allocation to MNREGA (Rs 48,000 crore) will put more money in people’s hands. Higher investment in the transport sector and rural housing, where 10 million houses have been promised by 2019, with the Pradhan Mantri Awas Yojana allocation pegged at Rs 23,000 crore, indicates that the government has bet big on Bharat. One figure says it all: in this budget, agriculture and allied sectors get a whopping Rs 1.87 lakh crore, 24 per cent higher than last year (over budget estimates). Among the many things this allocation does is address problems of farmers by putting in Rs 40,000 crore into irrigation and crop insurance. Finally, the government is focusing on labour-intensive industries instead of the much-touted Make in India campaign which has yielded precious few jobs. The finance minister cleverly assuaged one of the BJP’s major constituencies, the micro, small and medium enterprises (MSMEs), by reducing taxes. He’s relying on them to spur economic growth and jobs as they comprise 37 per cent of the GDP.
But I liked that the government kept to the high moral ground by continuing the black money purge, putting limits on transactions, cash donations to charities and political parties, rationalising real estate capital gains measurement and ways to promote digital transactions. Despite major state elections this year, the Centre has resisted the temptation to go in for populist schemes and freebie announcements, which is commendable. Our cover story analyses the budget in detail and includes an assessment from top experts, who echo many of these views.
All this is good economics and on predictable lines. But it does not tackle the structural problems of the economy. How many budgets have we seen packed with scheme after scheme for farmers, and yet still reliant on a good monsoon to bail out the economy? Every year, we see farmer suicides across the country. The reason, I believe, is that we don’t bother to fix the rotten pipeline to deliver these goods and services to the people. In fact, we continue to make it bigger. There was no attempt to rationalise subsidies on food and fertiliser, which take away Rs 2.15 lakh crore and are prone to high leakages. There is a faint-hearted approach to solving the problem of NPAs of PSU banks and similarly lackadaisical efforts at disinvesting in PSUs. If the fervour for radical reform stays with Prime Minister Narendra Modi for the remainder of his term, there is still a lot for him to do. I hope it does. The country desperately needs it.
Our March 14, 2016 cover