After the mind-blowing economic item number promised by the Narendra Modi electioneering machine — fix the fragile economy, tame the inflation tiger, rein in the deficit, reform those inefficient populist programmes and tax structures, attract overseas investment, get back to those go-go growth years — the budget was a tame affair. Apart from sticking by his predecessor’s target of 4.1 per cent (of GDP) for the fiscal deficit and promising a reduction to 3 per cent by 2016-17 while lifting overall growth back up to 7-8 per cent, there was a single word to describe Finance Minister Arun Jaitley’s budget: modest.
If this is the first major exam for the government in its fresher year, Jaitley’s overall performance was a solid B. Some individual grades follow.
His speech was a C, too long and a laundry list with a little bit, it seemed, for everybody. For a while it seemed unclear where it was going and if there was any vision driving his recitation; the stock market rolled its eyes, went into a swoon as he spoke, only to recover and surge a bit after he was done when it realised that Jaitley had actually scattered quite a few meaningful nuggets after all.
On the issue of making progress on fundamental reforms, I would give him a C. There were no drastic overhauls to curb inefficient spending — perhaps Jaitley was a little too mindful of upcoming state elections. His promise of ending the era of populist budgets lacked any real detail; he just kicked the can down the road by deferring them to an expenditure commission report to be released later in the year. Much-needed reforms that affect the labour market, bureaucracy, supply and distribution of food, and any real measure to catalyse the lagging manufacturing sector were missing. But, realistically, all of this would be too much to expect from a budget speech. We should get away from expecting budgets to be instruments of revolutionary change and a one-shot annual unveiling of grand policy. In light of this contextual detail, I will bump Jaitley’s performance on a reform agenda up to a B.
On the stability of his arithmetic also, I would give him a B. Jaitley’s projected revenues were 1.9 per cent higher than his predecessor’s and his projected expenditures were higher by 1.8 per cent. Given the knife-edge he is walking in sticking to a 4.1