Crowding out and opening up

Tied spending, revenue crunch mean the finance minister did the best she could on financing the deficit

Finance Minister Nirmala Sitharaman prepared the Union Budget for 2020-21 while labouring under multiple constraints. The economy has slowed sharply. Tax revenue is lower than expected by perhaps 0.7 per cent of gross domestic product or GDP — though what proportion of this is due to the economic slowdown and what to problems with goods and services tax (GST) cannot easily be determined. Political constraints continue to operate on the Budget process, given that this government is in perpetual election fighting mode, and the prime minister’s office is known to be exceptionally active. While Ms Sitharaman has demonstrated that she