close_game
close_game

The budget does not address the crisis of demand | Opinion

ByYamini Aiyar
Feb 01, 2020 10:24 PM IST

The FM made a good faith attempt to present her vision. But the budget lacked a diagnosis of what is wrong, a prescription to address it, and made baffling choices

This was the longest budget speech in India’s history of budget speeches. But two hours and 40 minutes later, 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.

The decline in consumption demand, especially in rural India, is a matter of pressing concern. But the budget may have made the problem worse with cuts in allocation. Instead, it should have streamlined public finance management systems and re-prioritised expenditure(Getty Images/iStockphoto)
The decline in consumption demand, especially in rural India, is a matter of pressing concern. But the budget may have made the problem worse with cuts in allocation. Instead, it should have streamlined public finance management systems and re-prioritised expenditure(Getty Images/iStockphoto)

To be sure, finance minister Nirmala Sitharaman made a good faith attempt to present her vision for what the economy needs. Aspirations, economic development and care are the three pillars that will drive the Indian economy. And to achieve this vision, she presented a large number of policy actions. A detailed 16- point action agenda for agriculture, a focus on education and skills, water and sanitation, an investment-clearing cell, district-level export hubs, infrastructure focused skill development, the National Infrastructure Pipeline — the list goes on. But nowhere in this laundry list of policy items can one identify any policy steps that respond to the urgency of the slowdown.

Forget any bold ideas or fiscal stimulus. Even the choices made within the current basket of policy actions and deficit targets are baffling. Consider this. There is little argument that the decline in consumption demand, combined with high inflation, especially in rural India is a matter of serious concern. In this context, many, including this columnist, had argued for the need to urgently strengthen public expenditure in rural India through the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). But instead Budget 2020-21 has seen a significant 13% cut in allocations from revised estimates of the previous year. This is despite the fact that the MGNREGS budget allocation has, for years, fallen short of demand for work, resulting in spending excesses of over ?4,000 crore (2018-19 figures). Instead, the focus seems to be on spending in rural India through the PM-Kisan, which has received an allocation of ?75,000 crore, a 38% increase over revised estimates. But , as my colleague Avani Kapur has highlighted in this newspaper, the implementation of PM-Kisan has been riddled with problems of targeting and weak implementation. In fact, this is one reason why expenditure for the scheme in FY-2019-20 has been significantly reduced from a budgeted estimate of ?75,000 crore to a revised estimate ?54,370.15 crore. Given these difficulties with the PM-Kisan and the fact that demand for MGNREGS is high, the choice of prioritising allocations for PM-Kisan over MGNREGS, at a time when rural consumption is at an all time low, can only lead us to one conclusion. The government has got both the diagnosis and the prescription of the current slowdown, completely wrong.

Add to this is an important cut in the food subsidy from a budget estimate of ?1,84,220 crore to a revised estimate of ?1,08,688.35 in FY 2019-20 and a lower allocation for FY 2020-21. Declining consumption clearly indicated that rural India was hurting from the current slowdown, and this budget has likely only made the problem worse.

Rather than slash allocations, this was the opportunity to initiate an overhaul of the public finance management system — rationalising subsidies, restructuring centrally-sponsored schemes, and most important, streamlining fiscal flows to reduce unspent balances (to the tune of over 1 lakh crore rupees) in different central schemes — and re-prioritising public expenditure, particularly in welfare schemes. But, instead, the budget merely reiterated the government’s oft-stated commitment to overhauling central schemes, leaving the problem for a future date.

An important issue that the FM did acknowledge head-on was the need to ensure transparency and credibility of the governments’ fiscal math. Importantly, she added an annexure that enumerated the government’s off-budget borrowing. This is a very welcome move and a critical first step to addressing the credibility crisis that the government’s fiscal numbers have faced since the obfuscation in the July budget. But the fine print raises more questions than it answers. The FM conceded to a fiscal slippage of 0.5% over last July’s promise of a fiscal deficit of 3.3%, taking the fiscal deficit for FY 2019-20 to 3.8%. The promise for FY 2020-21 is to put India back on the path of fiscal consolidation with a commitment to containing the fiscal deficit to 3.5% of GDP. But when off-budget borrowing is accounted for, the actual fiscal deficit is far higher and the projected target of 3.5% remains unachievable. Commitments to meeting this target from disinvestment and improvements in the Goods and Service Tax collection may not be enough, given collections in previous years. It may have been better to stick to a more realistic and credible projection. Despite the promise of transparency, the fiscal math disappoints again.

In the days before the budget two news items dominated the headlines — 5% GDP and the image of a young man with a gun pointed at protestors. These headlines were giving credence to the view that the prioritisation of this government’s political, majoritarian agenda was undermining India’s economy. This budget was an opportunity for the government to change the narrative. It hasn’t.

Yamini Aiyar is president and chief executive, Centre for Policy Research

The views expressed are personal

rec-icon Recommended Topics
See More
SHARE THIS ARTICLE ON
SHARE
Story Saved
Live Score
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Monday, March 03, 2025
Start 14 Days Free Trial Subscribe Now
Follow Us On
universo-virtual.com
buytrendz.net
thisforall.net
benchpressgains.com
qthzb.com
mindhunter9.com
dwjqp1.com
secure-signup.net
ahaayy.com
soxtry.com
tressesindia.com
puresybian.com
krpano-chs.com
cre8workshop.com
hdkino.org
peixun021.com
qz786.com
utahperformingartscenter.org
maw-pr.com
zaaksen.com
ypxsptbfd7.com
worldqrmconference.com
shangyuwh.com
eejssdfsdfdfjsd.com
playminecraftfreeonline.com
trekvietnamtour.com
your-business-articles.com
essaywritingservice10.com
hindusamaaj.com
joggingvideo.com
wandercoups.com
onlinenewsofindia.com
worldgraphic-team.com
bnsrz.com
wormblaster.net
tongchengchuyange0004.com
internetknowing.com
breachurch.com
peachesnginburlesque.com
dataarchitectoo.com
clientfunnelformula.com
30pps.com
cherylroll.com
ks2252.com
webmanicura.com
osostore.com
softsmob.com
sofietsshotel.com
facetorch.com
nylawyerreview.com
apapromotions.com
shareparelli.com
goeaglepointe.com
thegreenmanpubphuket.com
karotorossian.com
publicsensor.com
taiwandefence.com
epcsur.com
odskc.com
inzziln.info
leaiiln.info
cq-oa.com
dqtianshun.com
southstills.com
tvtv98.com
thewellington-hotel.com
bccaipiao.com
colectoresindustrialesgs.com
shenanddcg.com
capriartfilmfestival.com
replicabreitlingsale.com
thaiamarinnewtoncorner.com
gkmcww.com
mbnkbj.com
andrewbrennandesign.com
cod54.com
luobinzhang.com
bartoysdirect.com
taquerialoscompadresdc.com
aaoodln.info
amcckln.info
drvrnln.info
dwabmln.info
fcsjoln.info
hlonxln.info
kcmeiln.info
kplrrln.info
fatcatoons.com
91guoys.com
signupforfreehosting.com
faithfirst.net
zjyc28.com
tongchengjinyeyouyue0004.com
nhuan6.com
oldgardensflowers.com
lightupthefloor.com
bahamamamas-stjohns.com
ly2818.com
905onthebay.com
fonemenu.com
notanothermovie.com
ukrainehighclassescort.com
meincmagazine.com
av-5858.com
yallerdawg.com
donkeythemovie.com
corporatehospitalitygroup.com
boboyy88.com
miteinander-lernen.com
dannayconsulting.com
officialtomsshoesoutletstore.com
forsale-amoxil-amoxicillin.net
generictadalafil-canada.net
guitarlessonseastlondon.com
lesliesrestaurants.com
mattyno9.com
nri-homeloans.com
rtgvisas-qatar.com
salbutamolventolinonline.net
sportsinjuries.info
topsedu.xyz
xmxm7.com
x332.xyz
sportstrainingblog.com
autopartspares.com
readguy.net
soniasegreto.com
bobbygdavis.com
wedsna.com
rgkntk.com
bkkmarketplace.com
zxqcwx.com
breakupprogram.com
boxcardc.com
unblockyoutubeindonesia.com
fabulousbookmark.com
beat-the.com
guatemala-sailfishing-vacations-charters.com
magie-marketing.com
kingstonliteracy.com
guitaraffinity.com
eurelookinggoodapparel.com
howtolosecheekfat.net
marioncma.org
oliviadavismusic.com
shantelcampbellrealestate.com
shopleborn13.com
topindiafree.com
v-visitors.net
qazwsxedcokmijn.com
parabis.net
terriesandelin.com
luxuryhomme.com
studyexpanse.com
ronoom.com
djjky.com
053hh.com
originbluei.com
baucishotel.com
33kkn.com
intrinsiqresearch.com
mariaescort-kiev.com
mymaguk.com
sponsored4u.com
crimsonclass.com
bataillenavale.com
searchtile.com
ze-stribrnych-struh.com
zenithalhype.com
modalpkv.com
bouisset-lafforgue.com
useupload.com
37r.net
autoankauf-muenster.com
bantinbongda.net
bilgius.com
brabustermagazine.com
indigrow.org
miicrosofts.net
mysmiletravel.com
selinasims.com
spellcubesapp.com
usa-faction.com
snn01.com
hope-kelley.com
bancodeprofissionais.com
zjccp99.com
liturgycreator.com
weedsmj.com
majorelenco.com
colcollect.com
androidnews-jp.com
hypoallergenicdogsnames.com
dailyupdatez.com
foodphotographyreviews.com
cricutcom-setup.com
chprowebdesign.com
katyrealty-kanepa.com
tasramar.com
bilgipinari.org
four-am.com
indiarepublicday.com
inquick-enbooks.com
iracmpi.com
kakaschoenen.com
lsm99flash.com
nana1255.com
ngen-niagara.com
technwzs.com
virtualonlinecasino1345.com
wallpapertop.net
nova-click.com
abeautifulcrazylife.com
diggmobile.com
denochemexicana.com
eventhalfkg.com
medcon-taiwan.com
life-himawari.com
myriamshomes.com
nightmarevue.com
allstarsru.com
bestofthebuckeyestate.com
bestofthefirststate.com
bestwireless7.com
declarationintermittent.com
findhereall.com
jingyou888.com
lsm99deal.com
lsm99galaxy.com
moozatech.com
nuagh.com
patliyo.com
philomenamagikz.net
rckouba.net
saturnunipessoallda.com
tallahasseefrolics.com
thematurehardcore.net
totalenvironment-inthatquietearth.com
velislavakaymakanova.com
vermontenergetic.com
sizam-design.com
kakakpintar.com
begorgeouslady.com
1800birks4u.com
2wheelstogo.com
6strip4you.com
bigdata-world.net
emailandco.net
gacapal.com
jharpost.com
krishnaastro.com
lsm99credit.com
mascalzonicampani.com
sitemapxml.org
thecityslums.net
topagh.com
flairnetwebdesign.com
bangkaeair.com
beneventocoupon.com
noternet.org
oqtive.com
smilebrightrx.com
decollage-etiquette.com
1millionbestdownloads.com
7658.info
bidbass.com
devlopworldtech.com
digitalmarketingrajkot.com
fluginfo.net
naqlafshk.com
passion-decouverte.com
playsirius.com
spacceleratorintl.com
stikyballs.com
top10way.com
yokidsyogurt.com
zszyhl.com
16firthcrescent.com
abogadolaboralistamd.com
apk2wap.com
aromacremeria.com
banparacard.com
bosmanraws.com
businessproviderblog.com
caltonosa.com
calvaryrevivalchurch.org
chastenedsoulwithabrokenheart.com
cheminotsgardcevennes.com
cooksspot.com
cqxzpt.com
deesywig.com
deltacartoonmaps.com
despixelsetdeshommes.com
duocoracaobrasileiro.com
fareshopbd.com
goodpainspills.com
kobisitecdn.com
makaigoods.com
mgs1454.com
piccadillyresidences.com
radiolaondafresca.com
rubendorf.com
searchengineimprov.com
sellmyhrvahome.com
shugahouseessentials.com
sonihullquad.com
subtractkilos.com
valeriekelmansky.com
vipasdigitalmarketing.com
voolivrerj.com
zeelonggroup.com
1015southrockhill.com
10x10b.com
111-online-casinos.com
191cb.com
3665arpentunitd.com
aitesonics.com
bag-shokunin.com
brightotech.com
communication-digitale-services.com
covoakland.org
dariaprimapack.com
freefortniteaccountss.com
gatebizglobal.com
global1entertainmentnews.com
greatytene.com
hiroshiwakita.com
iktodaypk.com
jahatsakong.com
meadowbrookgolfgroup.com
newsbharati.net
platinumstudiosdesign.com
slotxogamesplay.com
strikestaruk.com
trucosdefortnite.com
ufabetrune.com
weddedtowhitmore.com
12940brycecanyonunitb.com
1311dietrichoaks.com
2monarchtraceunit303.com
601legendhill.com
850elaine.com
adieusolasomade.com
andora-ke.com
bestslotxogames.com
cannagomcallen.com
endlesslyhot.com
iestpjva.com
ouqprint.com
pwmaplefest.com
qtylmr.com
rb88betting.com
buscadogues.com
1007macfm.com
born-wild.com
growthinvests.com
promocode-casino.com
proyectogalgoargentina.com
wbthompson-art.com
whitemountainwheels.com
7thavehvl.com
developmethis.com
funkydogbowties.com
travelodgegrandjunction.com
gao-town.com
globalmarketsuite.com
blogshippo.com
hdbka.com
proboards67.com
outletonline-michaelkors.com
kalkis-research.com
thuthuatit.net
buckcash.com
hollistercanada.com
docterror.com
asadart.com
vmayke.org
erwincomputers.com
dirimart.org
okkii.com
loteriasdecehegin.com
mountanalog.com
healingtaobritain.com
ttxmonitor.com
bamthemes.com
nwordpress.com
11bolabonanza.com
avgo.top