Budget 2015: Let's leave carping for tomorrow , it is Jaitley's day today

In the film My Fair Lady, when Prof Higgins returns home after successfully showcasing Eliza Doolittle at a society event, his friend Colonel Pickering breaks into song - ’tonight old man, you did it, you did, you said you would do it and indeed you did’.

Many would like to sing that to finance minister Arun Jaitley after his budget speech today. Yes, it was devoid of Big Bang Reforms, but after the Economic Survey yesterday which advocated a more incremental approach, this was expected. But he has done a series of small things, which together will add up to an effect similar to what a few big ticket reforms will.

When he said the budget would provide a roadmap for “accelerating growth, enhancing investment and passing on the benefit of the growth process to the common man, woman, youth and child: those, whose quality of life needs to be improved” these were not empty words. The budget has delivered on each of these.

Most importantly, Jaitley has given infrastructure spending a big push without pushing up the fiscal deficit hugely (though he has relaxed the fiscal consolidation roadmap).

The main problem areas have been identified and addressed. The problem of stuck projects and lack of new investments had been flagged time and again. It was well known that a lot of this was due to the problem of sovereign clearances, which just don’t come.

There’s a planned legislation to set up a pre-existing regulatory mechanism to take care of multiple prior permissions. While this will take its time in coming (there’s going to be an expert committee that will draft this), what will come sooner is setting up projects in a plug-and-play mode. Which means the government will first get all necessary clearances and then bid out projects. This is going to be done first for five ultra-mega power projects and then later extended to other large infrastructure projects.

Vinayak Chatterjee of Feedback Infrastructure will be a very pleased man. This was a suggestion he had made to the United Progressive Alliance government when the government was exercised about stuck projects.

The infrastructure push is not about large infrastructure projects alone. It is also about housing for the poor, sanitation facilities, drinking water, electrification of villages and village roads.

The cleaning up of the tax system is a big feather in Jaitley’s cap. There are steps to curb black money, end the problem of exemptions (Rs 62,398 crore was the revenue foregone on corporate income tax in 2014-15) and bring down the corporate tax rate over four years.

Nothing has been done to put more money in people’s hands, but the incentives for various savings is what the economy needed – pushing up the savings rate and channel the savings into investments.

The proposed bankruptcy law reform is also a major step – this was an issue the Economic Survey also highlighted. The bankruptcy code needs to be brought in as promised.

Does the budget fall short on anything? Yes. Though one can understand the reluctance to bring about major subsidy reform, it would have been appropriate to kick start a process to exclude the better off sections from receiving subsidies even as the poor are protected. Merely appealing to people to give up subsidised cooking gas is not enough.

But let’s leave carping for tomorrow. Today it is Jaitley’s day.