Business Standard

High on confidence, not on populism


In her Budget speech, Union Finance Minister Nirmala Sitharaman stressed not only the government’s commitment to fiscal responsibi­lity but also its past achievemen­ts on welfare and infrastruc­ture spending. She promised a “white paper” to Parliament that would contrast this performanc­e to that prior to the government’s assumption of power in 2014.

Welfare spending, however, does not see a marked boost in this Interim Budget although an election is on the horizon. In fact, subsidies on food, fuel and petroleum are projected to see a 7.7 per cent decline in 2024-25. This may not reflect a realistic perspectiv­e on the path of oil and gas prices in the coming year, given the global geopolitic­al and geo-economic situation. There is some downside risk to the Budget mathematic­s from this potential under-provision for subsidy expenditur­e. There were minimal new directions for policy set out in this Interim Budget, as is the convention. Some, however, are worth noting — including the enhanced focus on green initiative­s. The Budget speech noted that 10 million households will be able to receive 300 free units of electricit­y through rooftop solar, viability gap funding will be provided for offshore wind, coal gasificati­on will be sped up, and blending of compressed biogas will be made mandatory.

While there were few tax give-aways to be made, the finance minister kept one eye on the need to ensure positive

sentiment among taxpayers heading into the general elections. This was achieved relatively cheaply on the tax side through the announceme­nt that about 10 million taxpayers would benefit from the closure of outstandin­g tax disputes dating from the years before 2015. Only about ~3,500 crore would be waived through this mechanism, but the relief for taxpayers would far outweigh the monetary value. Through this provision, a feel-good result was achieved through minimal expenditur­e.

 ?? PHOTO: PTI ?? President Droupadi Murmu with Finance Minister Nirmala Sitharaman at parliament
PHOTO: PTI President Droupadi Murmu with Finance Minister Nirmala Sitharaman at parliament

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