The Budget's bet

Will the Budget succeed in kindling a durable economic recovery?

- PUJA MEHRA

Budgets change taxes and government's spending, which invariably changes the way we spend, invest and earn our incomes. Budget speeches often include announcements of how governments plan to reform the economy, which affects our economic future. Reforms determine if and how there'll be better and newer income opportunities, and how much lower will be the risks and costs involved.

This column had made three points about last year's Budget. First, that unlike the hyperbolic commentary, it was not a 1991-type Budget, and all the euphoria and predictions about imminent revival of economic reforms of the sort Manmohan Singh had rolled out as P V Narasimha Rao's finance minister was claptrap. Prime Minister Rao used the balance-of-payments crisis in the 1990s for delivering reforms. But the COVID crisis could not be used for anything of the sort. On the contrary, Parliament repealed the farm laws, pulling back on reforms.

Second, this column had predicted that the Budget was too optimistic about the capacity to disinvest. That Air India's much-delayed privatisation could be completed is a great feat for which Finance Minister Nirmala Sitharaman deserves praise. She had also announced that she would privatise public sector banks, a good decision, but one, the column predicted, that would be difficult to deliver. The Budget had estimated that 31.75 lakh crore would be raised from disinvestment during the current year that will end on March 31. This year's Budget shows that government has realised it was overoptimistic and now expects to raise only about ₹78,000 crore.