Nirmala Sitharaman’s first budget: It is different
The eagerness to see what the First Budget of (a) the second term of the Modi Government, and (b) of a First Full-Fledged Woman Finance Minister would be like was aroused while reading the latest Economic Survey of the Government of India; Economic Surveys of the Finance Ministry are usually presented one day before the presentation of the Union Budget. Reading the Economic Survey gave indications of the articulation framework and change of attitude of the government on international diplomatic relationships.
In a surprising development of attitude, the Survey talks with appreciation the Chinese growth strategy of ensuring competition in production capacity and product variety while simultaneously ensuring price and quality competitiveness. Further, the Survey talks of the imperative to move beyond the conventional Economic Analyses.
In this, it talks of the relevance of contemporary approaches emanating from Behavioural Economics and even mentions the 2018 Economics Nobel Laureate Prof Richard Thaler. These and other analyses give sufficient hints on what the New Finance Minister has been working on how to leave a path-breaking milestone in India’s Economic Policy Formulation. Being an educated and intelligent Finance Minister as the present occupant is, this was expected.
It is in this background that Nirmala Sitharaman has presented her maiden Union Budget today. Interestingly it has Annexures too to the Budget Speech.
The Budget centres around the ten points relating to the Vision for the Decade as spelt out in the Interim Budget in February 2019: “i. Building physical and social infrastructure; ii. Digital India reaching every sector of the economy; iii. Pollution free India with green Mother Earth and Blue Skies; iv. Make in India with particular emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices; v. Water, water management, clean rivers; vi. Blue economy; vii. Space programmes, Gaganyan, Chandrayan and Satellite programmes; viii. Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables; ix. Healthy society – Ayushman Bharat, well-nourished women & children. Safety of citizens; x. Team India with Jan Bhagidari. Minimum Government Maximum Governance.”
The Core Orientation of the Budget is the adoption of One Nation, One Solution/ One Nation, One Intervention/One Nation, One Policy. It is in this respect that the Budget is different from the earlier approaches. This immediately rules out the possibility of the restoration of the Special Category States for which the North East and some other States have been clamouring for.
Further the Budget emphasises a holistic look at approaches to issues and interventions.
Here we may recall what the Economic Survey has written: “Public policy affects all aspects of our lives. Public policy influences people to act in a socially desirable way, be it driving safely, conserving natural resources, educating children, respecting the human rights of fellow citizens or saving for retirement. Some policies subtly influence by fostering the right incentives while others mandate desired behaviour or ban undesirable ones.” The “nudging” approach reflected in this perspective is incorporated in the budgetary announcements.
One significant difference the Budget makes is the avoidance of segregating problems as stand-alone ones. The Budget looks at every issue of the economy as necessarily multi-dimensional and as part of an interrelated larger set of issues.
Thus instead of the usual emphasis on sectoral allocations, the Budget emphasises on a set of interventions to address a larger objective.
The objective of the Budget remains raising Investment for more production and Export the excess production.
This is being seen as the only way to create employment and raise income; a typical East Asian approach. This singular approach at understanding issues and evolving interventions makes the Budget different from the earlier ones wherein we could see segregated sectoral and regional approaches. Thus the Sitharaman Budget is definitely non-traditional. We may see this as an Absolutely Experimental Budget. The intentions and approaches are clear.
Time will tell us if it becomes truly path-breaking ushering Indian economy into a phase of Virtuous Cycle or otherwise.
The writer is Professor, Department of Economics, Head, Department of South East Asian Studies and Director, Centre for Study of Social Exclusion and Inclusive Policy, Manipur University, India, Member, Advisory-cum-working Committee, ASEAN Study Centre Shillong, MOEA, GOI Member, Board of Directors, North East India-ASEAN Chamber of Commerce and Industry, New Delhi. He can be reached at Mobile: 91-8794738559 or Phone: 91-385-2435084 (Office)