The budget misses the mark

The first budget in the tenure of a government is an important indicator of its plans for the economy. The July 1991 budget is India's most important one as it overhauled the economy and ­completely changed the growth trajectory and everyday life and business. It was the first budget of the P V Narasimha Rao government, made against the backdrop of a severe economic crisis and the looming risk of a sovereign default. Prepared entirely by economists, within months, that budget took the economy out of the crisis, delivered GDP growth recovery within a year's time and laid the foundation for a modern economy. Of course, grave political and economic crises had opened up the space for deep structural reforms that year. But even in the absence of apparent crises, governments have used budgets to set the tone on their policy agendas. The Modi government's maiden budget of July 2014, for example, made big-ticket announcements. In the years since then, the government could implement only a few of the announcements by Finance Minister Arun Jaitley. Still, that budget speech succeeded in informing the policy system and investors about his intentions and preferred policy direction. In that budget, Jaitley proposed a progressive reduction in the government's debt-GDP ratio from close to 47 per cent in the last year of the previous government to 41.4 pe

This article was originally published on September 01, 2024.