I shall start with mine. You can find it here. India’s Finance Minister presented the fiscal budget for 2010-11 on Friday, February 26th. He promised a vision document. It did not quite amount to that, to put it mildly. Given what had happened in Greece and given the fact that this was no ‘election year’ in India, bold strokes were both needed and expected. But, they did not come. As M. J. Akbar puts it, he promised vision but gave revision.
The header that Economic Times gives to the views of Swaminathan Aiyar is misleading. In my view, Swami Aiyar focuses on the key assumption behind the budget. Any budget statement can be evaluated on its specific measures and/or on the underlying assumptions behind the macro targets.
The budget assumes 8-8.5% real growth and 4% inflation, giving 12.5% nominal GDP growth. This very optimistic scenario assumes that the global economy will not slow down. If it does, all bets on deficit reduction are off. [More here].
In my piece in MINT, I had focused on this too. The nominal GDP growth assumptions for the next three fiscal years are 12.5%, 13.0% and 13.5% respectively. A good way to get there would be to achieve 8.5% to 9.0% real GDP growth and an inflation rate of between 4% and 5%. What has the budget done to achieve these combinations? Second, what has the budget done to guard against the risk of these assumptions not materializing and de-railing the fiscal deficit reduction targets? Third, what has the budget done to ensure that all the outlays are going to result in outcomes?
Writing in ‘Business Standard’, Jahangir Aziz voices similar sentiments:
But if the government truly thinks that the recovery is fragile, wouldn’t it have been wiser to be more conservative as it was last year?… As we have seen recently, the global recovery can turn up nasty surprises and create enough anxiety to keep domestic financial markets volatile. Relying on a narrow set of adjusters is plain risky. If a few things go wrong, the budget will look shaky….So in the coming months we will be living on a prayer for continued high growth, high global liquidity, low global risk aversion and low oil prices. [More here]
Staying with ‘Business Standard’, I find Mr. Ninan’s comments understated but it is not difficult for any one to grasp the underlying message. The Finance Minister has been lucky. He has to stay lucky. Not too different from Jahangir Aziz’s message. I must say that, based on some of his recent comments, Mr. Ninan’s form has returned.
Ajit Ranade, inspired by Sachin Tendulkar’s terrific double-hundred in a one-day match recently against South Africa, trains himself to look at the positives. It would be silly to dismiss his comments as cheer-mongering:
After twenty years of India’s reforms, nay his debut, Sachin recently scored four test centuries and an awesome ODI double ton. His best is not over. Assuming his journey is mimicking India’s economic journey, with GST and DTC round the corner, look for a high scoring economy in the coming years. [More here]
I was surprised to find MINT sounding positive on the budget. Both the edit and Niranjan’s comments convey satisfaction with the work of the Finance Minister. The edit calls it a fine blend of pragmatism and vision. Actually, on closer look, Niranjan’s comments are more guarded and neutral than the headline suggests.
Shekhar Gupta of Indian Express subsumes his positive comments on the budget in an overall panegyric on the Prime Minister based on, what he sees as, the developments in the last seven days.
While he is positive based on recent developments, over in ‘Economic Times’ Professor Arvind Panagariya warns of complacency and backsliding on economic reforms. He points to three developments that make him worry. One is the ban on imported machinery and equipment for power sector, second is minimum wages in the organised sector and the third is the ban on Bt. Brinjal that Jairam Ramesh, the Minister for Environment announced recently.
Regardless of whether these developments turn out to be damaging and/or irreversible, I agree with him on one thing: there is a certain sense of complacency on the possibility of higher economic growth rates. To an extent, the budget is an example of that complacency.
Finally, it was delightful to see the Finance Minister of the ‘secular’ UPA government invoking the blessings of Lord Indra to help deliver a broad-based recovery in the coming months. That is what many mean by the essential Hinduness of India, not the ‘Hindutva’ propounded by VHP and Bajrang Dal.