Budget expectations

Economics or politics? It’s a toss up for Jaitley: Even while tackling fiscal deficit, volatile oil prices and agrarian distress, the Finance Minister will keep an eye on elections, too...

Budget expectations*

Finance Minister Jaitley may have to be a magician, tight-rope walker and a mathematical wizard, all-in-one while putting together what it could turn out to be the last ‘full budget’ of the current regime in Delhi. FM may have no difficulty in making choices among populist measures or cutting and pasting some changes in paragraphs on direct taxes. Problems will crop up when he has to speak about legacy issues like agricultural income tax or taxing the super-rich.
While so much concerned about the recovery of NPAs or common man’s woes arising from Aadhaar-linking requirements, media and analysts opt to remain silent when it comes to the pockets where money is getting accumulated, adding new billionaires and making the rich super-rich. At some stage, FM will have to identify such pockets to make good the shortfalls and deficits that stare at him during the budget exercise. The band-in-aids of drawing from the so-called surpluses of PSUs or dipping into the reserves of the central bank, which can at best be short-term remedies have been over-used during the last three years.
Money is accumulating outside the government fold, almost with the same speed at which heaps of garbage are growing in cities and suburbs. It is government’s responsibility to canalize such hoardings for productive purposes. Even if the details of money outside government accounts are not dovetailed into the budget, GOI’s guidance expressed through Budget Speech should be clear about the social responsibility of people who ‘grow’ rich, exploiting nation’s resources. Perhaps the responsibility to develop infrastructure for healthcare, transport, education, old age care and so on in geographical areas close to large industrial establishments could be entrusted to the industrialists concerned. This will release substantial budgetary resources for deployment in other priority areas and reduce fiscal deficit to a great extent.

M G Warrier, Mumbai
*A brief version of my response to a related report in Business Line appeared as a letter in that paper on January 11, 2018


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