What Budget 2020 could have been, had FM chosen to be fiscally professional

Think of A one-man play where the stage is set for a superlative performance. The script is brilliant. The theme is powerful. The auditorium is filled to the brim. 

Shortly after the curtain rises, the actor flubs his early lines; flubs these yet again; and again. Then lines are being recited from a completely different script, which has nothing to do with that evening’s play. This agony continues for two hours and forty minutes. The loyal audience claps every once in a while, more out of allegiance to the actor and the drama company than for any thespian content. Finally, the actor loses his voice and hastily the curtains come down. 

Watching and listening to Finance Minister Nirmala Sitharaman present her second Union Budget was an eerily similar experience. Here’s a sharply abridged version of what it could have been, had she chosen to be fiscally professional and focused.

“Mr Speaker, these are difficult times. Our country’s growth has dropped to its lowest in the last 11 years. Several sectors of the economy are suffering from stress. Consumption has fallen, the more so in rural India and among the vulnerable and poor. Millions of young — the sinews of our nation — are bereft of job opportunities. Despite rate cuts by the Reserve Bank of India, there is insufficient growth in credit. Though better than earlier, the banking sector is still facing problems of bad loans. And many infrastructure sectors, especially housing, are in the red”.

“This is a time for decisiveness, to pull out our essentially dynamic economy from its present morass. Decisiveness requires focusing on a few key proposals, which have to be adequately funded, so that these initiatives can quickly reach out to the common citizens of India, give them succour and, by doing so, create income and consumption that can lift us out of this low growth trap. The prime minister entirely agrees with this approach. It is about depth, not width”.

“It is not surprising that we have overshot the fiscal deficit by 50 basis points. Revenues were down and there were limits to which we could cut expenditure. But that’s behind us. Where do we go from here?”

“First, on the revenue side, we are being modest. We believe 10 per cent nominal gross domestic product growth is feasible and have pegged overall revenue growth at that level. If we do better, let us be pleasantly surprised. Goods and services tax (GST) needs strengthening. This involves lower number of rates, better implementation, and greater cooperation with the GST Council. This is my primary task for the year on the revenue side”.

“On the expenditure side, we will focus on MNREGA and a few other key projects. We will fund these more than adequately. And we are setting up a special ministerial group to track their implementation on a fortnightly basis. The monies for these projects will reach the needy, at a speed hitherto not seen in India. This I promise to the House. Other relatively inessential projects are being phased down; some are being eliminated.”

“I also commit to recapitalising our public sector banks to ensure that they get back to what they are there for — lending”.

“With acute resource constraints, I cannot give tax incentives, either for individuals or corporates. I promise a transparent, hassle-free tax regime, but there cannot be any more sops. Nor can there be additional relief in indirect taxes, barring correcting instances of inverted structures”.

“This is the time for consolidation. We must create an exchequer that is healthy for the next generation without forfeiting on growth. Mr Speaker, it will be a difficult and occasionally painful task. But such a task was undertaken in July 1991, which set the stage for India being as dynamic as it is today”.

“We have two choices. Spend our way without care, and land in even greater trouble in the years ahead. Or grit our teeth and focus only on the essentials to create a better tomorrow. Bear with us as we eschew the former for the latter. We shall overcome”. 
 

If only it were this… 

The author is chairman, CERG Advisory Private Ltd