What is most praiseworthy of this year’s Union Budget is that it is completely devoid of any populist measures. Rather, the budget presented by India’s first full-time female Finance Minister has offered many bold steps to revive the health of Indian economy. If those steps are implemented properly, Indian economy may shine in the coming days. There is no change in the income tax slab. Rather, India’s Richie Rich group will have to dish out more. For infrastructure development, the country will have to pay more for petroleum products. Quite naturally, the stock market and others have not appreciated those measures kindly. The fall in NIFTY and SENEX stand as a testimony to it. Yet, it must be said that walking through the populist path we have damaged our economy badly. Crores of rupees have virtually drained out of country’s exchequer without any meaningful return. Nirmala Sitaraman’s budget thus marks a new beginning. To know what lies in future, we will have to wait for some time. But that shouldn’t prevent us from thanking Ms. Sitaraman for her bold initiatives.
How Indian economy was dominated by populist measures can be judged from the fact that after couple of years of introducing new economic policy the Narasimha Rao-Manmohan Singh duo did not proceed further with their ideas of opening India’s economy fully. They halted midway in such a manner that India’s economy today is neither mixed nor open. It is somewhere between these two. As a result, today on one hand we are seeing disinvestments and on the other huge amounts are being spent to pay the salaries and maintenance of some sick and loss making public sector companies. Every economist will admit that these two do not go hand in hand. But we couldn’t do much as this is a legacy we have inherited from a half-hearted move to liberalise India’s economy. Had Rao-Singh duo decided to go ahead with their economic policies despite few setbacks in Assembly elections, we wouldn’t have been in such a situation.
Which economic model India should adopt to move forward has long been debated. While a section, mostly the supporters of open economy believe that increasing wealth of the rich will also help the poor in the country to improve their standard of living, a section opposed to them firmly believe that India’s vast economic potentials can never be fully reached until and unless there is improvement in the lives of people living in the country’s rural areas. Still we have not reached any conclusion and as a result in the name of welfare schemes, populist measures have made entry in a big way. If the agricultural sector is in crisis, the solution is loan waiver. If any industry is sick, the prescription is to nationalise it, so that employees do not lose their jobs. There are many such steps which did not help the economy to move forward even an inch. Yet, such steps were taken to woo the electorates to remain in power.
Clearly, Ms. Sitaraman in her very first budget has chosen a path which was avoided by her predecessors. By taking the path, she has shown us that she has the courage to defy the traditional way of thinking and chose a new route that she believes is for the betterment of the Indian economy. So instead of criticising her vision and the strong measures suggested in the budget, one should wait till it reaches its culmination before jumping to any conclusions.