BackPolicy uncertainty
All policy is made against the backdrop of political bargaining
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The debate whether the job of issuing and managing public debt should be taken away from the Reserve Bank of India is perhaps two decades old. The arguments have also been known for long. The issue has been especially resonant over the past few years. Nobody can claim to have been blindsided.
It, therefore, does not reflect well on the finance ministry to have first tried to push through the change in the fine print of the budget and then publicly withdraw the proposal, as finance minister Arun Jaitley did in a statement to Parliament on Thursday. It follows another similar retreat on the issue of minimum alternate tax. Policy predictability is the victim.
All policy is made against the backdrop of political bargaining. What is curious about the current episode is that the two parties involved in the bargain are both parts of the same system, and the Finance Bill has been used as a tool in the process. This is both curious and disturbing.
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