The caravan of reforms keeps moving in full pace: Arvind Panagariya
This is a budget that, despite the temptation and a good enough excuse, doesn’t stray from the Modi government’s agenda to maintain fiscal discipline.
As an economist, I am grateful that the PM hasn’t given up the path of fiscal rectitude. Rejecting calls by the ‘stimulus school’, the final budget pegs fiscal deficit for 2019-20 at 3.3%, down from the revised estimate of 3.4% for 2018-19 and 3.5% of actual level in 2017-18.
Growth has been sliding down for the last four quarters, and it fell down to 5.8% during the last quarter of 2018-19, the latest quarter for which we have GDP estimates. There have also been reports of a slowdown in both private consumption and private investment. So, the temptation, as well as a good excuse, to go to town with spending was there. But the PM, who has fought hard for an unprecedented five years to restore fiscal discipline, has stayed course.
While closer scrutiny will have to be done in the days to come, GoI has also continued to maintain a high quality of its expenditures. The budget, thus, provides generous allocations to building the country’s infrastructure, most notably, roads and railways. There are also generous incentives for investment in housing. In terms of social expenditures, the provision for piped water has been moved to the top of the agenda.