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Letter to BS: Budget may stick to fiscal rectitude ahead of Lok Sabha polls

It will be hard for the FM to balance the need to be fiscally conservative and electoral realities

Business Standard 

Arun Jaitley

This refers to “Budget may stick to fiscal rectitude” by Arup Roychoudhury (December 31). It is going to be a tough challenge for the finance minister (FM) to continue the theme of fiscal consolidation in his February 1 speech. Even if it is an interim budget — the proverbial blind spot in terms of a future fiscal road map — the government will have no idea about the expected fourteenth finance commission recommendations by that time. It will be hard for the FM to balance the need to be fiscally conservative and electoral realities. Having said that, Arun Jaitley — the wizard that he undoubtedly is — may just manage to combine the two.

Losses in state elections in Rajasthan, Madhya Pradesh and Chhattisgarh do demand the government to come out with some big lollipops — however irrational — for the electorate, especially the rural and lower middle class. The prime minister’s recent criticism of the new Congress state governments’ farm loan waivers precludes anything on this front. Dealing with agriculture distress will, therefore, be challenging. Perhaps higher support price may be the only way out. That small and medium-sized enterprises are hit by the goods and services tax is a myth. They are hit only because they have got used to paying no taxes. And yet, that is the segment the FM will be forced to pamper.

Here’s wishing the FM good luck. Hope he sticks to what he had told you, about “going by past precedence in an election year”, in the interview with Business Standard earlier this month.

Krishan Kalra Gurugram


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First Published: Mon, December 31 2018. 20:52 IST