#Budget2020 - Sunday Musings - Modinomics and how much of it comes thru executive move

Listing of Life Insurance Corporation (LIC) likely to be done after December  Finance Secretary Rajiv Kumar said.

"......listing in the second half of FY 2020-21 seems logical".

"We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law," he said.

The Budget Day is never the end of the world specially when Narendra Modi is at the helm of affairs.

Such a day does come and has to go, but as far as Moditva and its Economics is concerned much of that actually happens outside Budget.

ONCE UPON A TIME, THERE USED TO BE A PHENOMENON CALLED RAIL BUDGET - NOW THAT'S THING OF A PAST.

The demonetisisation was hardly announced in the Budget. The GST came as a major politico-economic decision under the stewardship of Late Arun Jaitley, the scene of action was Indian Parliament and the timing was mid-night - marking a shift in 'tryst' in mid-night jargon.

The GST also had blessing of the then President Pranab Mukherjee - a political stalwart of the erstwhile socialist era! Even the corporate tax cut - a major reform agenda was enforced through an executive decision in September 2019.

Thus, my emphasis is much more could come from 'Modinomics' throughout the year and it can be any cabinet sitting or solo announcement at a press conference or Prime Minister's suo motto national address! Remember November 8, 2016 ! 

What delights a Maodi-Bhakt yet again is the journalistic hype of 'Do or Die' Budget has again gone wrong yet again.

Why should Modi decide or announce anything big on a Budget day as there could be a risk of displeasing one section if he pleases another. It is not purely economics, stupid; - I will join the bandwagon who call this - 'political economy'. And when it comes to political economy - Prime Minister knows how to mix it with his 'Moditva' image --- a wonderful synthesis of a vote cather, a performer PM and one who wants to gove a clean administration with promise of a welfare state where the poor have toilets, drinking water and houses.

True, I am referring to these lofty ideals - knowing very all much of it is also around the borderline of rhetoric and image building!

"....our government shall work towards taking the country forward so that we can leapfrog to the next level of health, prosperity and well-being. We shall strive to bring Ease of living for every citizen", said Finance Minister Nirmala Sitharaman in her second Budget speech on February 1, 2020.

So what does the Budget 2020 mean ? - It actually means there is a right balance between adequate outlays for capital expenditure by ensuring that a large part of government borrowings would go towards this.  The government will push towards infrastructure projects over and above work for  creation of capital assets in sanitation and water conservation.

Finance Minister was articulate enough to point out that during 2014-19, India clocked growth of 7.4% on average with inflation, averaging around 4.5%. "It is worthwhile to note that inflation was close to 9% in the last two decades of the last millennium and ranged 10.5% during 2009-14. Between 2006-16, India was able to raise 271 million people out of poverty, which we

all should be proud of." 

Having said so, it is important to note that Sitharaman has pulled off a skilful balancing act. Importantly, she has also addressed most of the issues that economists and others wanted her to address. At the end of the day, even RSS knew their wishes have been fulfilled vis-a-vis the allocation for Jammu and Kashmir and Ladakh union territories.

Speech excerpts:

88. North Eastern region has a very high priority in Government’sDevelopmental agenda. Government is ensuring smooth access to financialassistance from multilateral and bilateral funding agencies to help introduceinnovative and global best practices. Central Government has effectivelyused an online portal to reduce gestation period of online. This hasimproved the flow of funds to the northeast region.

89. The Government is fully committed to supporting the all-rounddevelopment of the newly formed Union Territories of J&K and the UnionTerritory of Ladakh. Accordingly, an amount of `30,757 crore has been25provided for the Financial Year 2020-21. An amount of `5,958 crore hasbeen provided for the Union Territory of Ladakh.

Blogger in the Corridors of Parliament

To drive the point home, one ought to say that, the Budget lays emphasis on reversing the slowdown of the economy by unveiling a multi-pronged set of far-reaching measures. 

It has been rightly summed up by Rajnish Kumar, Chairman with State Bank of India, that the Budget is a good start it tries to push a series of far reaching reforms aimed at energising the Indian economy through a combination of short term, medium term and long term measures.

Among other things, we need to give out that the Budget envisages India as a preferred destination for education for foreign students. There is a pointed reference about FDI in education - although the move is being resisted by the RSS-affiliated Swadeshi Jagran Manch as a starter. 

Of course, the debate after the Budget has been on new Tax slabs and a new regime giving IT payers the option to make his or her choice, the finer point suggests the government will give push to Prime Minister's highly envisioned 'Make in India' agenda.

Speech Excerpts:
Our policy of Make in India has started giving dividends. India
is now making world class goods and exporting such products. We
have made considerable progress in medical equipment too. Till few
years back we were dependent on imports for medical equipment.
Now, not only we are manufacturing medical equipment but also
exporting them in large quantities. This sector deserves further fillip. 

It goes without stating that desi manufacturing scene will see a greater improvement from the Finance Minister's proposals to increase basic customs duty on goods such as mobile phones, electrical vehicle toys, furniture, refrigeration etc.

The government also has measures for putting more money into the pockets of the people, helping the agrarian sector to double the farmers’ income by 2022 remove dividend taxation on companies to boost the business bottom lines.

There is also hint about privatisation and reforms.

The announcement on LIC with public offering is more of an intent. It may sound as big time adventurism as RSS-affliated Bharatiya Mazdoor Sangh has already red flagged it.

Many analysts and Sitharaman's critic admit the Budget is perhaps in the right direction -- but it has remained conservative and safe.

PM Modi is known for his decisiveness and bold politics, but when it comes to economics - he has always played safe especially as the Prime Minister and he played 'always safer' when it comes to announcement of Budget proposals.

Arun Jaitley was a right friend and compatriot. Nirmala Sitharaman is also a suitable lieutenant and thus her Budget speech had more of literature and political rhetoric than economic fireworks.

To some, thus it could be a disappointment Budget - for others it is -- a lost opportunity.

But the most pragmatic way of looking at Modi 2.0 and its economic journey will be that much more could come from executive decision and it is important to note that 'intent' has been made clear.

Few Questions on #Budget2020

Q: What was the best thing in the Budget, and what was the worst?

- In brief, it is an inclusive Budget. From 2014, Moditva in terms of financial management focused on formalisation of the economy. This effort continues notwithstanding the slowdown obviously due to global factors and some of the domestic reasons are also responsible. 

-- Budget can contribute to give a shot in the arm of economy. There are attempts for reviving higher consumption. The relief on income tax for earning up to Rs 15 lakh is good trigger on all these. 

-  The 16-point plan to help agri sector is welcome step.

And on the worst part of the Budget - the negative factor - is the absence of reforms. This is one reason the Stock Market did not respond positively to the Budget. Industry fears that lack of bold measures will not help fight consumption slowdown. However, as stated above the intent of the government is made clear, some 

Q: Will Nirmala Sitharaman's first full and (second Budget) steer the economy out of present crisis, if not mess?

Some issues are matter of concern though on the face value it is a harm no one budget.

--- The economic slowdown had hit rural India but no extra money is being pumped. There  is also slashing of food subsidies but there is hike in budget allocations in agriculture but most of it will go to PM Kisan.

 Increase in public expenditure can boost the economy. Similarly, the IT relief will help middle class. However, decreased allocation under MG-NREGA makes it a point that it is not a populist Budget. Therefore, one needs to emphasie that the Budget2020 is a balance between stimulus and reforms.