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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.

(Aroon Purie)

Our March 14, 2016 cover

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