At the traditional meeting of the finance minister with economists, I addressed the issue of how the Budget should be assessed once it is delivered. I suggested a very simple yardstick—if at the end of the Budget presentation, there was even a single person comparing the BJP-Modi-Jaitley budget to the UPA budgets, then the FM should consider himself to have failed. So, how did the FM perform? To be sure, there were the Congress apologists and prisoners of “political opposition” who felt compelled to say this was a bad budget; from my vantage point, the fact that the opposition to the Budget was fatuous, is further proof that this maiden Modi Budget was path-breaking and pro-growth in many respects.
However, I must mention that at the end of the first 45 minutes or so of the speech, I did comment: “What is the difference between the BJP and the Congress?” There was the usual laundry-list of items to be done, the usual cook book approach to harnessing of ingredients— R100 crore of coriander added to R300 crore of rice, etc. A recommendation to Jaitley—one that I have been making (without any success) to every FM for the last twenty years: Please don’t mention anything in the budget speech unless its value is more than a R1,000 crore; and please adjust it for twice the inflation rate for the next 10 years.
The difference between Jaitley’s Budget and the UPA budgets is not in the presentation (bad in both cases) but in the content. The BJP Budget talks about investment, and how the investments necessary for enhanced growth will be financed, how the cost of this financing has to be, and will be, substantially reduced, e.g., no CRR and SLR requirements for infrastructure investments. The UPA budgets, in contrast, talked about giving rights to all, of all kinds, including happiness; they ended up delivering everyone misery. That is the difference between Modi-Jaitley and Sonia-UPA—and vive le difference!
Now for the good news, organised here according to the wish-list of many.
Retrospective taxation: Promise of no future misbehaviour but lack of clarity on what to do about tax crimes already committed by the previous government. If the spirit of this Budget is taken, and indications taken from promises about the future, then the grade is 8/10. But objectively, 5/10.
Fiscal consolidation: There is only a promise to overhaul the inherited, bad subsidy regime. The FM: