Budget 2018 to aid growth, but with higher inflation, weaker fiscal balance

The inescapable inference is that govt now finds it extremely difficult to get the deficit down to 3%

With eight state elections in 2018 and the national election to follow by spring 2019, Finance Minister Arun Jaitley’s fifth Budget had to balance economic priorities against political imperatives. As a result (as Amartya Sen once commented on a paper decades ago), it has some good points and some not-so-good points. Given limited space and my inborn worrying tendencies, here I will focus mostly on the latter category. In doing so, I will deploy my standard four-part framework for Budget assessment: Overall fiscal stance, tax policies, expenditure policies, and reform initiatives.