The approach and content of an annual budget of an economy depends on the existing context of both internal and global economic situations. The present global economic situation is being more and more favourable. At present, most of the European economies are doing well, similarly Japan. Considering several indicators one can see that the US economy is also rising satisfactorily. So, the global situation is favourable for India. But India has not managed to utilise it and is unable to grow faster. In the internal sector non-performing assets of banks and a lot of unfinished investment projects could not be solved. The complicated implementation of the GST and its rate are changing and hence a source of huge problem. The Finance Minister should be the leader of the GST Council, not a finance minister of a state. The increase of the fiscal deficit target in the Budget from 3.2% to 3.5% will have negative implication in the economy. The most important thing is that the revenue deficit must be zero as it is related only to consumption and not to productivity enhancement.
Is it a rural-oriented budget? One thing to be noted is that a budget is a sacred document. Every project must be backed by monetary provision. In this Budget even the MSP hike by 50% is being highly criticized for its method of calculation. Rural stress is to be addressed with more care. The same is true of health insurance scheme, and the lack of financial provision. Customs duty reduction on quite a number goods has been based on the logic of enhancing ‘Make in India’. But those days of high tariff rates are gone. Small tariff change can make any sense. Actually there is no clear calculation about loss and gain of this change of duty rates.
The Finance Bill is also a subject of criticism. Finance Bills include everything on taxation. But there are so many amendments year after year that it loses its importance. The number of days for debate and discussions on budget matters is so inadequate that it is doubtful how seriously all the important matters can be discussed in such a short time.
[This is extracted from Yashwant Sinha’s Budget analysis presented to the Calcutta Chamber of Commerce].