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Budget Impact

The tendency to believe that the Union Budget determines the direction and scope of the Indian economy is a throwback to the old ‘socialist’ days, when government ‘managed scarce resources’. In the present day, few look at it more than a financial statement regarding government allocations for mostly its own expenditure. The impact of it, especially in direct terms, is reducing as the years pass. It is more in the NITI Aayog that decisions taken are expected to have a greater impact. Those, too, in the general sense of the government’s approach to the economy. (It is folly, therefore, for sundry Chief Ministers to think attending the Aayog’s meetings is pointless.)
Less government and more governance is a principle just as applicable to the economy as in general administration. It is easier to identify the symptoms of a stressed economy and create a commotion in Parliament than to understand the underlying causes. How to fix these causes becomes an even bigger challenge. Policy makers face the added challenge posed by the ‘breaking news’ attention span of public opinion. The water crisis faced by Chennai and other cities is the result of decades of neglect, as is the encephalitis scourge in Muzzafarpur, but are sought to be resolved in the course of one TV debate. Turning the situation around would require almost as much time as it took to develop. It is necessary, therefore, for the general public to display some patience and cooperate as much as possible in structuring a response. In fact, the re-election of the present Union Government is a result of the realisation among the people that five years are too short a period to fix the problems.
So stressed is the system that even before one area is attended to, several new crises emerge. Fire-fighting, itself, becomes a fulltime occupation. Changing public behaviour, reforming the age-old responses of business to whimsical and ideologically prescribed policies (one of the root causes of black money generation), bringing up large sections of society that have failed to benefit from modernisation, etc., are a challenge that all governments need to address in a united fashion. Everybody agrees that India’s rapidly growing population and the skewed gender ratio pose a massive challenge. Some believe that it is a demographic dividend, but very little has been done to actualise this principle. The influence of organised labour on policies continues, making it difficult to harness even the potential of low wage workers. Little effort has been made to enhance productivity in any of the sectors. The cultural shift necessary to build up innovation and enterprise remains only in first gear. Under the circumstances, what miracles can be expected from a single budget?