Haters are gonna hate…but Nirmala Sitharaman realised that she had her job cut and she stuck to it. So full marks to her for resisting the pressures of big announcements and delivering a Budget that focuses on employment, fiscal consolidation and at the same time keeps the National Democratic Alliance allies happy with announcements for Bihar and Andhra Pradesh.
Employment
The biggest criticism against the Modi government has been jobless growth. So, Sitharaman announced several schemes to address that. Hence, you have the employment-linked schemes in the Budget, where employers are being directly incentivised by the government for hiring more people.
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Another persistent challenge for India to reap its demographic dividend has been the skill gap leading the Economic Survey to note that: "Estimates show that about 51.25% of the youth is deemed employable. In other words, about one in two are not yet readily employable, straight out of college.” The finance minister has proposed to address this through the internship scheme and the upgradation of 1,000 Industrial Training Institutes. Again, a direct dole from the government to the companies hiring interns will move the needle.
So, a Rs 2 lakh crore allocation for 4.1 crore jobs in the next five years will not only address the criticism against her government but will also boost demand in the economy by increasing household earnings.
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Fiscal Consolidation
A commendable effort from the finance minister as she has kept off needless intervention when India is already growing at an enviable pace. Buoyed by tax collection and a bumper Reserve Bank of India dividend, Sitharaman’s focus should be on containing fiscal deficit which she has done by keeping the percentage increase of capital expenditure lower than the previous years. Also, she has shown great prudence in reducing revenue expenditure as a percentage of the total government overall spending.
Coalition Dharma
From temple corridors to infrastructure corridors along with an allocation of Rs 11,500 crore for flood-control measure, Santa came early for Nitish Kumar’s Bihar. Sitharaman also promised support to Bihar for funds from multilateral banks. Similar was the case for N Chandrababu Naidu’s Andhra Pradesh where the Budget proposes disbursement of Rs 15,000 crore this year for promoting industries and infrastructure with a commitment of further assistance in the coming years. There were also grants for backward areas of the state and a promise for financial assistance to ensure an early completion of the Polavaram Irrigation Project.
But much of the finance minister’s proposals are promissory in nature with assurances of assistance in securing funds from multilateral agencies. So, Sitharaman ensured that she was not arm-twisted by her coalition partners.
Nirmala Sitharaman does fall short of announcing any real reform and gets caught in pointless tax tinkering. So, it is a four out of five for Sitharaman’s seventh budget.
