At a time when rising protectionism and stagnant growth have left several countries baffled, Dr. Bibek Debroy, a member of the government think tank NITI Aayog, sees no dearth of opportunities for Indian businesses. In an exclusive interaction with The Dollar Business, he explains the logic behind the policy decisions taken up by the government in the recent past and how they will help India’s economy going forward.
TDB: How do you read this year’s Union Budget? Do you believe it serves the broader reform blueprint of the government?
Dr. Bibek Debroy (BD): The Union Budget this year was presented against the backdrop of a few institutional changes such as the abolition of the distinction between planned and non planned expenditures (drawing from the 14th Finance Commission Recommendations) and the end of the Railway Budget and its merger with the Union Budget. Another important change was the advancement of the presentation of the Union Budget by a month, which in my view broadly aligns with the government’s realisation that there is a need for changing India’s financial year and moving to a calendar year cycle ultimately. This will help in better policy planning.
I would say Finance Minister (FM) Arun Jaitley has indeed managed to present a balanced Budget that would not just help the government move ahead with its development plans, but would also promote economic growth and create an enabling environment for entrepreneurs across the country.
Now, talking about fiscal consolidation, it’s well apparent that this time the Finance Minister has stuck to his fiscal targets. However, before delving deeper into the subject of fiscal consolidation, let’s for a moment uncover the nuances involved in preparing the Union Budget. We know that these fiscal targets are primarily a function of revenue and expenditures. Revenue, particularly tax revenue, is largely a function of what the growth is going to be, and therefore while dealing with it one needs to make certain assumptions about the nominal rate of growth and out of that about the probable growth in tax revenue and the non-tax revenue.
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