13 May, 2021

Worldview, Streetmap

For all its positives, the budget doesn't look far and wide

Illustration by Sorit
Worldview, Streetmap
Since 1991, we have come to expect a vision of the economy’s future in the budget speech. This did not happen on July 6, 2009. The day before, the Economic Survey had raised hopes of real reform but those hopes were dashed. Pranab Mukherjee spoke like an accountant, not a statesman, and the stockmarket fell by almost a thousand points. The new government lost an important opportunity to spell out the economic programme on its mind and win over domestic and foreign investors.

Ultimately, the nation needs private investment to pull us out of this economic downturn. Because of the failure to articulate the long term, investors worry that the big spending stimulus of this government is here to stay and will crowd out private investment. A large deficit is understandable in these times of recession, but we needed a commitment to return to fiscal responsibility once normal times return. Deficit spending on this scale risks a re-rating of the country, which would mean a higher cost of money, higher inflation and bad consequences for the Indian...

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