After Dr Manmohan Singh’s two path-breaking budgets, the first in 1991 and the next in 1992, the only time that we have had a dream budget was in 1997, when Chidambaram almost walked into history. Since then we have been looking for a big bang idea, but it has turned out to be like the proverbial needle in the haystack. And now, despite the great expectations, the wait continues…
Whether it had to do with Arun Jaitley holding two heavy weight portfolios, and hence his inability to devote adequate time to each, or whether it has been due to a dearth of ideas arising out of exhaustion after a rather shrill electoral battle is anybody’s guess.
We don’t want to be offensive given that the new government has not had much time. But then, budgets are drawn not by the government but by the babus, under instruction from the government. Surely, the finance minister would not have read the budget speech for the first time only when he delivered it on the floor of the Parliament.
But first, let’s get into the pluses: As our experts say elsewhere in this issue, the proposed hike in FDI limit in insurance and in defence is welcome. That this sits with what the UPA had always wanted to do is a different issue. The proposal to focus extensively on infrastructure is an idea whose time has come. A nation can ride its way to growth only with the help of its infrastructure. And finally, the decision to appoint a committee that would examine the financial architecture for SMEs, the bulwark of our economy, is profound. Of-course what is important is that when the committee comes out with its suggestions it should be executed expeditiously and on as-is basis.
And now on to the minuses: The generous view is that this government is continuing with the policy of its predecessor. The irony is that it has been doing this on several fronts. Take the case of the price hike before the railway budget. That was vintage UPA. Next is the frequent petrol price hike. It is nobody’s case that the price should not be linked to international oil prices, but the NDA had earlier cried hoarse about it and had even indicated that the tax on petrol be slashed significantly. Nothing like that has happened. The MNREGA, about which so much noise was created by the NDA, continues. It looks as though the government hadn’t changed at all; only the colour had changed.
But we digress. The rail budget was impressive in parts, especially the ones relating to bullet trains and relating to improving rail safety. When they happen, it would redefine the contours of travel in our country. The direct tax proposals have seen some tinkering here and some tinkering there to keep the middle class happy. It looks like it’s seeking for short-term gains. On the indirect tax front, there have been no significant policy proposals. They are an extension of the old regime’s allocations. One would have expected alternative paths, either to raise taxes or to rationalise them.
Also sadly the budget hasn’t elaborated at length on what it intends to do with and what would be the time line for executing or abandoning some of India’s key outstanding legislation. Like: the Companies Act, 2013 which has taken 20 years to materialise, the Goods and Services Tax Act in respect of which the BJP blew hot and blew cold and, most importantly, the Direct Tax Code. Budgets should be on direction and big picture rather than on minute details of which concessions to extend and which to withdraw.
We would have been happier seeing an indication of how the growth targets will be achieved. We can only say what we have all along said that it is time to lay down a one-time 5-year policy framework and within that framework make adjustments and allocations. This will take away the annual tamasha.