Budget 2018: Fiscal prudence vs populism
ET Bureau|
Feb 01, 2018, 08.11 AM IST
It is politics over economics as finance minister Arun Jaitley presents Budget 2018 on Thursday. Being the last full-year Budget under the Modi government, this is one opportunity Jaitley would not like to miss to keep the BJP's rural vote base intact. Many believe that despite the fault lines on the fiscal front, Jaitley will attempt a Dream Budget loaded with incentives for the middle class and farmers.
Economists say Jaitley will have to do a tightrope walk, given the limited headroom he has. For one, revenue collections are not quite matching up to his projections. Also, high crude oil prices and a revival in the global economy are posing new challenges on the external front.
Another big concern is the slow pace of job creation, which the Opposition is using to hit out at the government.
So will it be an election Budget, with Jaitley loosening his purse strings to keep the voters happy? Or will he stick to the fiscal consolidation path? On the eve of Budget 2018, political leaders and economists discussed the options before the finance minister on ET NOW's India Development Debate. Here are some key takeaways:
PANEL VIEW
SADANAND DHUME
RESIDENT FELLOW, AMERICAN ENTERPRISE INSTITUTE
The government is not going to simply toss the fiscal deficit target away. There may be some relaxation. My own prediction is that they will present a reasonable easing of the fiscal deficit target. But in reality, the government will overshoot it, because in the end this is an election year and winning the elections matters the most.
GVL NARASIMHA RAO
BJP SPOKESPERSON
All our budgets have been for Bharat. The government is focused on a new India. All macro-economic indicators are very positive and job creation will remain a priority area. Certainly, more needs to be done, but saying nothing has been done is mere propaganda.We have challenges, but the economy is far better than what it was when the Congress was in power. This government has ensured that there has to be a culture of doing business.
SWAMINATHAN AIYAR
CONSULTING EDITOR, ET NOW
On direct taxes we should see a continuation of the reduction in corporate tax rates. Income-tax thresholds may be increased. Employment is important, but the Modi government has disappointed. Will Congress be any better? There are fundamental structural problems. Does the Congress have a solution which the BJP doesn't? People are not investing because domestic demand and exports are not as good as they used to be. You must make exports competitive again.
M V RAJEEV GOWDA
SPOKESPERSON, CONGRESS
PM Modi has been resolutely against a farm loan waiver from the beginning, even though some state governments have actually moved in that direction. Basically what you could see is more headline management. The rural sector has given up hope that this government is going to do anything for it. We don't see even basic investments that would change the game, going forward. Most proposals, including the irrigation scheme, have not achieved their goals.
Economists say Jaitley will have to do a tightrope walk, given the limited headroom he has. For one, revenue collections are not quite matching up to his projections. Also, high crude oil prices and a revival in the global economy are posing new challenges on the external front.
Another big concern is the slow pace of job creation, which the Opposition is using to hit out at the government.
So will it be an election Budget, with Jaitley loosening his purse strings to keep the voters happy? Or will he stick to the fiscal consolidation path? On the eve of Budget 2018, political leaders and economists discussed the options before the finance minister on ET NOW's India Development Debate. Here are some key takeaways:
PANEL VIEW
SADANAND DHUME
RESIDENT FELLOW, AMERICAN ENTERPRISE INSTITUTE
The government is not going to simply toss the fiscal deficit target away. There may be some relaxation. My own prediction is that they will present a reasonable easing of the fiscal deficit target. But in reality, the government will overshoot it, because in the end this is an election year and winning the elections matters the most.
GVL NARASIMHA RAO
BJP SPOKESPERSON
All our budgets have been for Bharat. The government is focused on a new India. All macro-economic indicators are very positive and job creation will remain a priority area. Certainly, more needs to be done, but saying nothing has been done is mere propaganda.We have challenges, but the economy is far better than what it was when the Congress was in power. This government has ensured that there has to be a culture of doing business.
SWAMINATHAN AIYAR
CONSULTING EDITOR, ET NOW
On direct taxes we should see a continuation of the reduction in corporate tax rates. Income-tax thresholds may be increased. Employment is important, but the Modi government has disappointed. Will Congress be any better? There are fundamental structural problems. Does the Congress have a solution which the BJP doesn't? People are not investing because domestic demand and exports are not as good as they used to be. You must make exports competitive again.
M V RAJEEV GOWDA
SPOKESPERSON, CONGRESS
PM Modi has been resolutely against a farm loan waiver from the beginning, even though some state governments have actually moved in that direction. Basically what you could see is more headline management. The rural sector has given up hope that this government is going to do anything for it. We don't see even basic investments that would change the game, going forward. Most proposals, including the irrigation scheme, have not achieved their goals.
