27 January, 2021

The Baritone Ebbs

Despite the effect his speech had on equity markets, his budget tackles the issue of a slowing economy.

The Baritone Ebbs

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...



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