A change in course?

It is often hard for governments to reverse course. This involves admitting that something you earlier did might have been ill-advised.

- MIHIR S SHARMA

It also could mean that you have to listen to advice from those whom you either think are poorly informed or do not have your best interests at heart. But it is far more dangerous to stubbornly stick to a course of action after it has become clear that it is failing.

It may not be immediately clear, but the Union Budget, presented last week, did, in at least three important fields, signal - if obscurely - that the finance ministry is listening to advice and changing the direction of policy. This is of particular importance since ill-natured punditry over recent years has often accused the current finance minister and finance ministry bureaucracy of being unwilling to listen to criticism.

The first shift might be in trade and tariff policy. Since at least 2016, Union Budgets have had an overtly protectionist tone. Tariffs have been raised across the board, and we seemed to have returned to an era in which Budget speeches would tinker with tariffs at the request or insistence of various interest groups and domestic industries. This not only incentivises rent-seeking and raises costs for domestic consumers, but it also means that Indian companies struggle to enter global value chains. It diminishes our export potential. These points have been repeatedly made to the finance ministry, apparently to no avail. The concerns of traders and consumers seemed irrelevant compared to the protectionist demands of local capital.