We expect too much from the budget. This year, those expectations were shaken somewhat, and when trading closed on Feb 28, hours after the finance minister’s speech, the equity markets were at their lowest for the year. I wouldn’t fault the FM for this; given the circumstances, I think he’s made a game showing. The situation he has inherited is horrible; his budget forced markets to take a closer look at reality.
The core reality is a slowing economy, which even the government’s own Central Statistical Organisation estimates will grow only 5.0 per cent during the financial year 2013-14. The UPA government had gotten used to an economy—and tax revenues—growing at a much more rapid rate, and become increasingly profligate with its expenditure on welfare schemes. At the same time, it had refused to adapt to stubbornly high crude oil prices, allowing subsidies on both petroleum and fertiliser to mushroom. The mix of slow revenue growth and ballooning spending led to record deficits and greater dependence...
THIS ARTICLE IS PRICELESS...
To read this piece, and more such stories in India's most exciting and exacting magazine, plus get access to our 25-year archives goldmine, please subscribe.
