The best of the day’s opinion, chosen and curated by ThePrint’s top editors.

Haseeb Drabu | Former finance minister of Jammu and Kashmir

Mint

Drabu criticises Budget 2020 for failing to create a sense of confidence in the country’s economic policy. He detects a lack of aggression in the government’s policy, which is “clearly witnessed in … (its) social agenda”.

The Budget, “at least in its dressed-up numbers”, looks at long-term fiscal policy when the focus should have been the government’s public expenditure policy. The budget “half-heartedly” focusses on consumption-driven growth policy, Drabu adds. Also, the tax rejig has “squeeze[d] fiscal space”, he writes.

Drabu says Finance Minister Nirmala Sitharaman ought have focused on expenditure, be it transfer payments, subsidies or tax exemptions, that would have “quickly put more money in the hands of poorer consumers”, boosted purchasing power, “and revived growth in the short run”.

C. Rangarajan | Former governor of RBI

Economic Times

Rangarajan finds the Budget well-intentioned despite not mentioning “the word ‘slowdown’ even once”. He highlights the positives — a range of proposed measures from the expenditure programmes to a tax rejig, management of public sector banks, and more.

However, he says “it is a moot point if the proposed government expenditures will stimulate demand”. The expenditure programmes “may show how demand will be revived” but revenue projections alongside fiscal deficit “will indicate whether these expenditure programmes are sustainable”, Rangarajan explains. He is sceptical of whether the 3.5 per cent fiscal deficit “will stick”.

“The finance ministry will have to monitor revenue growth so that expenditures are in tandem with the fiscal deficit,” he adds.

Rangarajan criticises “simplifying personal income tax”, as “the impact of this may be very limited”. He recommends moving towards a single regime instead of giving “options”.

Ajay Shah | Professor, National Institute of Public Finance and Policy

Business Standard

Shah writes that many of the measures announced in Budget 2020 “”are useful, in the small” but do not “add up to a strategy”. Sitharaman did little to address the “unease of private persons that has manifested itself in private investment”, he adds.

The FM should have focused on “market failure, and building a rule of law environment through which private persons will feel safe”, Shah writes.

Right now, India is in “a business cycle downturn”, and the “tools of macro policy have limited potency” in such a situation, he says, suggesting that the country undertake “foundational work in changing financial regulation, taxation and capital controls in India”.

Shah describes the importance of a Budget speech — a “visual spectacle” in this age of the “electronic revolution”. He writes it would have been better if Sitharaman had organised her speech into “4,000 words of a political message and 4,000 words of an economic strategy message to private persons in India and abroad”.

Yamini Aiyar | President and chief executive, Centre for Policy Research

Hindustan Times

After the longest-ever Budget speeches by Nirmala Sitharaman, Aiyar notes, “the only thing we have clarity on is that the government is still not willing to offer a clear diagnosis, forget the much-needed prescription for an economy, which in the words of a former chief economic adviser, is headed for the intensive care unit”.

Aiyar credits Sitharaman for her 16-point agenda’s focus on education, healthcare, skills and infrastructure, but says nowhere in the laundry list is there focus on the economic slowdown. “There is little argument that the decline in consumption demand, combined with high inflation, especially in rural India, is a matter of serious concern,” she writes.

Aiyar writes that there needed to be more attention to food subsidies and the Mahatma Gandhi National Rural Employment Guarantee Scheme to facilitate demand, and ads that this budget — an opportunity for the Modi government to debunk the claim that its political agenda was undermining India’s economy — failed to rise to the occasion.

C.P. Chandrasekhar | Former professor of economics, JNU

The Hindu

Chandrasekhar refers to the restructuring of the tax slabs in Budget 2020 and says there was considerable pressure on Sitharaman to show she was making an attempt to kick-start the economy. He writes, “…her hands were clearly tied by circumstances and ideology”.

Chandrasekhar notes an interesting fact: There was a departure from past practice as allocations in different areas like agriculture, sanitation and nutrition were given as absolute figures, with no comparative figures.

He also underlines the high fiscal deficit and cut in allocation to MNREGS, and concludes: “It (the government) speaks of the absence of any macroeconomic vision for the management of the economy. That absence was clear in the text of the Budget speech that did not recognise the severity of the crisis that has engulfed the economy and the fisc and offered no way out of the crisis other than a promise to privilege wealth creation.”

Renu Kohli | New Delhi-based macroeconomist

Financial Express

Kohli points out a “sidestepping of fiscal rules” with reference to the government’s use of the “FRBM escape clause” in the Budget. The clause allows deviation up to 0.5 per cent of the GDP on some specified grounds, she explains.

Kohli writes that despite this “gain in extra fiscal space… increase of capex share in overall spending is modest, and the bulk continues to be current”. Also, the “background… (behind) invocation of the FRBM clause is quite unclear”, she adds.

In this way, the government has “managed to ‘escape’” in the hope that structural reforms will “revive growth, and investments, with help from monetary easing, and a possible pick up of global growth”, explains Kohli. She adds that allowing fiscal management from one year to the next to be based on a “hope and a prayer has stretched public finances to a breaking point”.

Kohli predicts revenue deficit will expand next year while the primary deficit is expected to “narrow from 0.7 per cent this year to 0.4 per cent of GDP in FY21” — the same level as in FY19. “There is serious need to improve these indicators, if only to recoup some space for policy response,” she concludes.

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