Omkar Goswami: The best news - Bereft of heroics

Consider some facts. First, agriculture has suffered from two consecutive years of drought and negative growth, often accompanied by farmers' suicides throughout central India. Second, rural India, which is quite a bit larger than agriculture, has slumped in terms of income generation and spends. Third, from 2011-12 to 2014-15, there was no infrastructure worth the name, either in terms of actual projects - be these roads, highways or ports - or from the point of view of the financial health of infrastructure providers and contractors who make such projects happen. And, fourth, despite 7.6 per cent growth (which may be a tad optimistic), the country is facing severe international economic and financial headwinds.

So, how does Arun Jaitley's third Budget measure up in relation to these issues? I would say very well in terms of intent. Take agriculture and irrigation, for which almost Rs 36,000 crore has been allocated.


In addition, some Rs 87,765 crore has been earmarked for rural India, of which Rs 35,500 crore is for daily work under the Mahatma Gandhi National Rural Employment Guarantee Act. Most impressive has been the budget for infrastructure, which builds national assets and provides serious employment opportunities.

For highways, the Budget provides for Rs 55,000 crore plus Rs 19,000 crore for the much-needed but ignored rural roads programme under the Pradhan Mantri Gram Sadak Yojana (PMGSY). This ignores the Rs 15,000 crore of bond funding by the National Highways Authority of India.

Perhaps the best praise for Jaitley and this Budget is his concern for fiscal prudence. It could have been all too easy for him to let the fiscal deficit swell use the oft-used and invariably specious excuse of "kick-starting the economy".

Instead, he has not only stuck to the Fiscal Responsibility and Budget Management roadmap of the fiscal deficit of 2016-17 to 3.5 per cent of nominal gross domestic product (GDP), but has also reduced the absolute deficit for the coming year by Rs 21,745 crore compared to the Budget Estimate of 2015-16, and by Rs 1,186 crore vis-a-vis the Revised Estimate.

It is a tough call in difficult times, and Jaitley will have to regularly monitor this so that the target is met. For one, nominal GDP may grow less than the 11 per cent projected in the Budget. For another, some of revenue targets could slip.

Talking of slippage, perhaps the worst performance of 2015-16 has been disinvestment. Against a target of Rs 69,500 crore, all that Jaitley hopes to garner by the end of this fiscal year is pegged at tad over Rs 25,300 crore - a shortfall of almost 64 per cent compared to the Budget Estimate.

He was clever in claiming a difficult year for equity sales and saying why should one go the whole hog on this when there was the excise duty windfall from crude oil. That's a bit disingenuous. The target for 2016-17 is Rs 56,500 crore, and I hope his civil servants will do better in achieving these numbers than in fashioning yet another excuse.

I am also disappointed in his not emphatically getting rid of retrospective taxes. His message to Vodafone and others is, "Be good, get rid of the cases that you have instituted and settle; and I shall consider not levying any penalties".

Using the might of the state for enforcing a rank bad law may be financially expedient. But it isn't exemplary governance.

Parenthetically, while I have no qualms about a mildly higher tax burden on the rich, I am always concerned about how the revenue department deals with higher tax demands. Will it be fair or foul, especially in the fourth quarter of the coming fiscal year?

All said, however, this is an eminently sensible budget - one that reminds me of Bertolt Brecht's memorable line in the Life of Galileo: "Unhappy the land that is in need of heroes." Thank god that in 2016 we no longer live by the need for heroic Budgets. And may it be so forever.

The writer is chairman, CERG Advisory