A budget speech full of smoke and dust but dispensing little or no light

Had it not been for the last five minutes when Finance Minister Nirmala Seetharaman announced a hike in petrol prices and the fiscal deficit targets, this could have been a Presidential Address or the Prime Minister’s reply to the motion of thanks. The 2019 budget speech would go down in history for the government’s move of starting a TV channel for startups as its principal job creating idea.

Finance Minister Nirmala Seetharaman tried to present what the Americans would call the State of the Union Address except the President of India has done it twice this year and the Prime Minister has done it many times over.

It started with the grand success of government schemes, tried to run down old UPA governments and ended with the idea of making India a 5-trillion dollar economy in the distant future.

The word slowdown did not find any mention in the speech, employment was mentioned five times, jobs only twice and agriculture thrice. The word Prime Minister is mentioned six times. This is just to point out where the priorities were.

The budget does have a few pluses like the simplification of the taxation ecosystem but the sheer impunity with which all of India’s problems were dismissed begs a simple question, couldn’t she have done better?

Listening to the budget, one would have thought India is growing at more than eight percent, Indian agriculture is growing at a healthy 6% and companies are running special drives to lure our young women and men from other countries. Except that unemployment is at a 45-year high, car sales are declining by 20% and 12000 farmers have committed suicide in Maharashtra alone in the last three years.

Indian agriculture is passing through the most difficult phases in recent history and agricultural growth rate in 2018-19 has come down to 2.7% from 5% in the 2017-18. The Economic Survey points to a significant decline in food prices in 2018-19 with prices contracting straight for five months in the year. The only thing that the Finance Minister could come up with was SFURTI which would “enable 50,000 artisans to join the economic value chain.” There was not even a mention of the distress in agriculture, not a mention of MSP or anything that could have given respite to the farmers of the country.

India is presently in the middle of a serious employment crisis and unemployment is at a 45-year high. The government first went into a denial before the elections and while it does acknowledge the crisis, the Finance Minister made no mention of this in her budget speech.

The Finance Minister’s response to unemployment has been “MUDRA loans to help him do his business.” Other job creating schemes that the FM announced was Rs 5,000 overdraft facility for women SHG members and Rs one lakh Mudra loan to one of the SHG members.

There could be some accidental jobs that could come up in the real estate sector (if there is a recovery following some tax tinkering) and there are a few hundred ‘aspirational’ jobs that could come up in the aviation finance sector that the government plans to create.

India’s exports may have grown from $318.6 billion in 2013-14 to $331 billion this year, a 4% rise over a five-year period and the manufacturing sector may not be in the best of health but the Finance Minister continued to push the narrative. Make In India was used six times during the budget speech but the Finance Minister failed to mention how much investment came under the initiative and how many jobs were created.

The two big things that came out of the budget were brought right in the end of the speech and the Finance Minister did not deem it fit to give a detailed explanation. She did not address the question how the government sought to meet the fiscal deficit target of 3.3% and the second unanswered question was why did she need to levy a Re 1 cess on petroleum products?

As stated earlier, she did not have the fiscal room to bring in new schemes and going by the current growth numbers, funding existing schemes is going to be a stretch. This was her first budget, she could have done so much better and perhaps appeared sincere to address concerns of the economy.

Nirmala Seetharaman is off to a bad start. The Sensex was down 434 points when reports last came in.