This year's Union Budget was one of the toughest in the recent years due to the demonetisation of Rs 500 and Rs 1,000 notes that induced much pain in the individuals' life and also in the economy in general.
Given the expectation of a likely windfall from the exercise the government undertook, hopes were running high and the burden was on Finance Minister Arun Jaitley to deliver.
However, opinion seems to be divided on whether the government has indeed managed to make good for the big pain endured by the country over the last few weeks.
Mihir Sharma, writing in the Business Standard, has noted that demonetisation has been the biggest impact on the Budget making process this year. Though the finance minister has deviated from the path of fiscal consolidation slightly for the next year by projecting a fiscal deficit target of 3.2 percent, he has shrunk it to 3 percent for 2018-19, the article notes.
The six consecutive years of fiscal consolidation by successive governments add up to a visible and credible commitment to macro-economic stability in India.
The editorial in the newspaper also echoed the sentiment and noted that the Budget has stayed away from any further shocks after the demonetisation that happened in November.
Mr Jaitley has delivered what the situation demanded: A Budget whose principal message is stability and responsibility.
Swaminathan S Anklesaria Aiyar in The Economic Times is scathing in his criticism that Jaitley's low-key budget has given a miss to the demonetisation scheme. According to him, the markets reacted the way it did (the Sensex closed 486 points up on Wednesday) because the players were relieved that there were no levies on capital gains. Also he notes Jaitley lost an opportunity to distribute the demonetisation windfall to Jan Dhan account holders.
Putting the windfall into general government spending is bad political economy.
The Wire's Siddharth Varadarajan too has flayed the Budget saying it has failed to "make amends for the sins of demonetisation". According to him, the budget makes it clear that the government is in no mood to deliver the much required fiscal and monetary boost to make good for the slowdown, layoffs and halting of supply networks that the demonetisation has resulted in.
All that Jaitley had left in his armoury was political grandstanding – the promise that demonetisation will increase the tax base and tax revenues, and the claim that his party intends to clean up political financing.
Meanwhile, Anil Padmanabhan of Mint feels the Budget is a "feel-good, with something for everyone".
This is probably among the boldest efforts by any government in modern India to embrace a market economy.
According to an editorial in The Hindu BusinessLine, in the context of the demonetisation and upcoming state elections, the budget is "remarkably restrained both in tone and substance".
But a larger plan to create jobs on a sustainable basis and overcome the demand constraint is missing.
Published Date: Feb 02, 2017 11:04 AM | Updated Date: Feb 02, 2017 11:25 AM