Sunday, March 01, 2015

Jaitley Presents Middling Budget, No Big Bangs

The stately Mr Jaitley has presented the latest budget, and while it contained some creative ideas, it didn't really show anything particularly courageous or bold:

There's nothing horribly wrong with this budget, but given the high hopes that were pinned on Modi for economic reform, there's nothing really fabulous about it either:

http://www.marketwatch.com/story/india-budget-plan-shuns-major-overhaul-2015-03-01

http://www.wsj.com/articles/sadanand-dhume-indias-missed-opportunity-1425233188

http://www.thenational.ae/opinion/editorial/indian-budget-far-from-being-revolutionary

http://www.bloomberg.com/news/articles/2015-03-01/modi-seen-missing-chance-to-fix-india-s-finances-as-oil-slides

It looks like Modi and Jaitley aren't going to stick their political necks out to fight for strong reform in an upfront manner, and are going to content themselves with an unimpressively gradual go-slow-approach, which through predictable wordsmithing is being pitched as "creative incrementalism".

Given the dearth of investment alternatives for global markets currently, there was a golden opportunity to use big-bang reforms to ignite massive investment inflows into India. But that opportunity is being squandered on the naive assumption that there will be some indefinitely prolonged window of opportunity for India to make its climb. Given the competitive nature of the global economy, this outlook seems to be filtered by rose-coloured glasses.

My worry is that the relaxed Modi-Jaitley reform timetable can easily be overtaken by the aggressive social populism of opportunists like AAP, who are simply old wine in a new bottle and represent the socialist status quo.

1 comment:

non-carborundum said...

San

This budget looks more like the output of the tinkering of ivy league alumni.

The real big-bang stuff is happening though, on a regular basis, such as:

Policies and implementation guidelines for wind and solar

Coal auctions

Crackdown on corporate espionage and generally putting the fear of god into crony capitalists

Strong mandate being given to PSUs to develop infrastructure, in a move away from private development of infrastructure

Land acquisition bill

Stronger foreign policy