A forward-looking Budget

Global credit rating agencies - Moody's Investors Service (Moody's) concluded that the budget is modestly credit positive for the sovereign, since it indicates a continued commitment to gradual fiscal consolidation by bringing down fiscal deficits to 3 percent over the next two years.

Analysis:

• This budget wisely stuck to the fiscal consolidation road map that they had rolled out last year, and reduced the fiscal deficit in the coming year to 3.5 per cent of gross domestic product or GDP.
• There are many aspects of an apparently incremental Budget that demonstrate indisputable forward movement and this budget include several of them.
• First, the emphasis on structural transformation of both the revenue and expenditure side. Several ways to make tax assessments less confrontational, or to more easily settle disputes, have been proposed; easier presumptive tax may bring large numbers of self-employed professionals into the tax net; tax officers’ wings have been clipped slightly.
• Second, steps are taken to improve the welfare plumbing. A Bill to back Aadhaar has finally been introduced; fertiliser subsidies are being given a trial; and various other schemes to operationalise alternatives to a faltering welfare system are being put in place.
• Third, there is a possibility that state-controlled bank being privatized. This has been accompanied by a promise of bank consolidation in which stressed banks are taken over by healthier banks, although many believe this process may not be wise as it penalizes systems that worked well and not the other way around.
• After two poor monsoons, a rural and agriculture focus is both politically and ethically correct. So, this budget should be sold as a Budget for the poor and farmers.
• So in conclusion, Much was laid out in this Budget as a future agenda: bank reform, the Indian Financial Code, welfare reform. The government will have a full year even if it puts the goods and services tax (GST) on the back-burner. It has started late, but at least it’s started.

By: Vishal