THE other problem with this budget is that it hardly dreams big. There are no problems he has solved and so one expert on television called it a ‘munimji’s budget’. Of course he is waiting for the biggest moment in his life when the GST would be announced and the first step towards making a unified common market taken. That is when a dream shall come true. But pending that dream there are no other goals that Jaitley has set his eyes on. It is this ordinariness of the budget that makes it listless.
With most economic policy decisions taken by the government whenever it suits them, the annual budget has lost its status as the sole policy making day in the economic domain. But it is a tradition that has to be honoured, and this time it came with two changes. First, the budget date was advanced to February 1st (possibly with an eye on the state assembly elections) and railway budget that used to be presented separately for 92 years was merged in it.
Union finance minister Arun Jaitley is an accomplished PR man and in this budget he displayed all the skills at his disposal. The result was simple – the sensex gave it a 461 point salute, and there was all-round praise from the corporate sector. The minister himself marketed higher allocation for rural development, agriculture and infrastructure as the key areas in his budget. On the political front, he was glad to introduce reforms in the manner in which parties mobilise funds. Considering that black money is a major cause of concern for him, his efforts to check black money in the political sector have to be both effective and simple to implement.
But then that is about all the seriousness that is there in the budget in so far handling the problems that are seriously affecting the economy’s performance. Jaitley has ignored the one problem area he was expected to tackle. This is the area of job creation which should have received separate attention in the budget. It was also one of the big ticket promises of the Modi Sarkar that it would create 2 crore jobs per year. The failure of the government to create jobs commensurate with growth has serious socio-political consequences. This is a segment that affects the aspirational youth who are looking for a fine remarkable time. Jaitley’s assumption that enough jobs would be created in the agricultural sector and the infrastructure area to offset this problem has two drawbacks. The jobs created in these sectors are mostly seasonal, and of temporary nature and do not match up to the expectations of the aspirational youth.
There is another linkage to the failure to create jobs, and this is absence of investor confident in the present climate. Demonetisation has certainly buoyed the bank balances, but what is the roadmap to using such cash? The public sector banks need to figure out the method in which they shall deploy this cash. Of course one way could be to ease the stress on their balance sheets due to the non-performing assets of the private sector. It is significant that Jaitley has realised this problem but his answer is deeply inadequate. He has made a provision of Rs.10000 crore for all the banks. Considering that the non- performing assets would not yield to such band-aid like solutions, this was the time for Jaitley to implement his ideas about cracking the banks’ NPA crisis.
As finance minister Jaitley has also done nothing to revive the investors’ confidence, there is a major slump in the domestic investment market, and this could have been revived by some budgetary incentives. But Jaitley has skipped that route. In other words, the domestic industry has been left to fend for itself.
In a government that puts a premium of transparency Jaitley obviously under orders from Prime Minister Narendra Modi is keeping off the entire demonetisation debate and has not referred to it in his budget speech. This omission is all the more glaring since the day before the Economic Survey he had presented to the parliament, had several references to demonetisation and not all of these could have a caused cheer in the government. But Jaitley did not show the same candour and ducked the issue altogether. It is shocking that an issue that has been described as the ‘boldest political initiative’ is not being debated in the parliament, and this is happening in the “world’s biggest democracy”.
The other problem with this budget is that it hardly dreams big. There are no problems he has solved and so one expert on television called it a ‘munimji’s budget’. Of course he is waiting for the biggest moment in his life when the GST would be announced and the first step towards making a unified common market taken. That is when a dream shall come true.
But pending that dream there are no other goals that Jaitley has set his eyes on. It is this ordinariness of the budget that makes it listless.
His one lakh crore safety programme for the railways has found many takers among the people. But if railway safety has to move beyond clichés and translate into reduction of number of accidents, then it calls for much more than money. This commitment does augur well for the various safety projects that have been launched by the railways.
But the real transformation shall come only when there is a proper mix of technology and management skills. Railways’ safety is a multi-layered complex issue and has to be handled with the same understanding and sensitivity.
This was Jaitley’s penultimate effort at budget making ( in 2019 there would be a vote on account ahead of polls) and he should have been conscious of his legacy issues. But in this budget he has been conveniently ignorant of this aspect.
With polls due after four days in Goa and Punjab Jaitley could not have ignored the income tax sop to those with annual incomes below Rs 5 lakhs, and in one he halved their income rate to 5 percent from 10. This would affect every tax payer in that income bracket.
So, Jaitley may not have indulged in fireworks in the budget and he has the satisfaction of staying within the limits of the course set by his boss. In these days of sluggish global growth and not so healthy environment in the world about business this would be seen as a great achievement, even it falls short of modest people’s expectations.