ET View: On a wing and invocations of ancient India

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It is a Budget that pampers a large, vocal section of income-tax-paying voters with income tax cuts, punishes high net-worth individuals by taxing their dividend incomes at the highest marginal rate, raises the wall of protection behind which Indian industry is once again building globally non-competitive goods, and tries to step up investment, more from extra-budgetary resources than from budgetary funds. It contains the fiscal deficit at a respectable level of 3.5% of GDP.

Does it hold out the definite prospect of reversing the growth slowdown? It does not. Does it fix the gaps in financial plumbing that prevent finance from being mediated to viable infrastructure projects? Not quite. A market for corporate bonds is India’s prime requirement now, and that remains a work in eternal progress.

Total central government expenditure will go up from 13.2% of GDP in the current year to 13.5% of GDP next fiscal. Considering the slippage in Budgeted expenditure of nearly Rs 88,000 crore in the current fiscal, faced with a revenue crunch next year, total expenditure could be lowered next fiscal, too, with no actual realised increase in expenditure. So, while the time taken to list out Budget schemes has definitely gone up, the actual expenditure by the government might well not.

If not by direct public expenditure, growth can be boosted by innovative policy and incentives. These are not completely absent but not all that profuse either in the Budget. If the global economy recovers, the capacity of the government to overhaul education and skill training takes a quantum jump and new infrastructure projects actually get made fast enough and complete financial closure, some revival would materialise.

Raising the limit on deposit insurance from Rs 1 lakh to Rs 5 lakh is welcome, as is the move to list LIC, whose accounts are a mystery wrapped in a riddle.

via ET

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