FE in association with News X
Budget 2015-16 has laid the groundwork for an investment-led revival of the economy but it has missed an opportunity to cut subsidies to free more money for a revival in the agriculture sector, according to a panel of journalists of the Express Group.
The assessment was in a post-Budget chat covered live by NewsX as part of its Budget coverage.
Financial Express managing editor Sunil Jain argued why he was pleased with the investment story laid out by finance minister Arun Jaitley. Jain said along with the Railway Budget of Suresh Prabhu, the accent on road investment was just what the government needed to do.
But Indian Express deputy editor Harish Damodaran disagreed. He said there was little evidence that the Budget had any plans for a similar investment revival for the agriculture sector. “Public investment in this sector is critical if India wants to push for a high GDP growth rate, but that has not happened,” he said.
According to Indian Express deputy editor Subhomoy Bhattacharjee, the accent on investment was also evident in the nature of the few tax sops Jaitley had offered the middle class. “The minister has tagged those with savings instrument, instead of offering plain vanilla higher tax rebates,” he argued. According to him, the Budget was politically correct too as it gave additional money to states like Bihar and West Bengal as they were close to calling for elections.
Indian Express resident editor (Mumbai) Shaji Vikraman said he was confident that the investment push would not create a pressure for the central finances that was beyond control. “The pushing back of the target of fiscal deficit reduction to me, is not a terribly difficult one to take.
The government has laid out a vision and the spacing out of reduction of the fiscal deficit targets should be examined in this context,” he said.
But the panel members agreed that by foregoing a chance to cut subsidies aggressively, the minister had missed out on a key opportunity he had with him this year. The cut in subsidies would have reduced the incentive to offer a high minimum support price for crops and encouraged the move away from cultivating only cereals like wheat and rice. The Shanta Kumar committee recommendations on public distribution system for instance, found no mention in the speech, Jain said. Damodaran said the lack of forward movement in this area was a major disappointment.
The discussion was moderated by Chetan Sharma of NewsX. He began the intense arguments with his question whether the budget on Saturday had created the set of incentives for the Indian economy to move on to a double-digit rate of growth. The panel agreed that this was not enough but also maintained that the fiscal space available with the finance minister foreclosed options.
Speaking on more granular topics, Vikraman said he was concerned that the Budget had pushed measures for greater concentration of powers with the government vis-a-vis the RBI, which he said could create problems.
According to Bhattacharjee, the measures were, however, part of a longer trend that began when the earlier government too accepted the report of the Financial Sector Legislative Reforms Commission. Jain argued that the changes in the financial architecture was bringing the Indian regulatory framework on par with those which obtained in the advanced financial markets like the UK.
In his comments on the panel discussion, Rahul Shivshankar, editor-in-chief of NewsX, said the answer to whether the finance minister’s second Budget lived up to expectations “really depends on how you look at the glass—half full or half empty. Those looking for epoch-defining reforms can’t be faulted for feeling a little underwhelmed. There is a much-needed R70,000-crore push to infrastructure. But this Budget is not about numbers, it goes beyond tinkering with rates. If you read between the lines there is something for everyone”.
