Union budget and the need for structural reforms
The budget has done some things right but there is a limit to what can be achieved through stroke-of-the-pen reforms
The immediate audience for the Union budget presentation on 1 February was Parliament, but the targeted audience was rating agencies—and of course, the electorate in the five state elections looming up. The first audience ensured that the fiscal consolidation path was broadly adhered to, with the message that India has the kind of responsible government deserving of a reward through a ratings upgrade. For the electorate in the large and important states going to the polls, details were provided of non-compliance in the upper income-tax brackets, with a promise of follow-up action. The message here was that demonetisation was somehow a needed starting point for elimination of kala dhan (black money), although, of course, it was not. The tax base could and should have been expanded 25 years ago, or last year, or the year before.