CHENNAI: Unlike the previous budgets of the present government, Budget 2018 was not burdened by any backlog of the past, said S Gurumurthy, noted commentator on political and economic affairs.
Speaking on ‘Economy and Budget, Conflict and Convergence’ at an event organised by FICCI’s Tamil Nadu State Council here on Monday, he said the first two budgets of the present government were intended to ride with staggering fiscal and external deficits. The third budget was impacted by the demonetisation, while the fourth was disturbed by the introduction of the goods and services tax (GST).
According to him, the benefits of two tectonic shifts in the economy — demonetisation and GST- have come into this year’s budget. “And, this is clearly founded on an optimism born out of the return of manufacturing, the rising services sector and a GDP growth that is back on track,” he noted.
Budget making has evolved over the years, Gurumurthy said. Earlier, the focus was only on taxation. However, in recent years, the social sector has started playing a prominent role. “Assessing budget speech within an hour of presentation will not give a clear picture,” he said adding that only after studying the huge volume of documents can one form an opinion.
“Redirecting the economy will take several budgets,” he noted.
Clarifying the fiscal deficit conundrum, Gurumurthy said the UPA left the fiscal deficit at high levels. He also questioned the logic that costly oil is the main reason for worsening current account deficit, saying oil imports are far less than capital goods imports. There was a spurt in capital goods imports from $25 in 2004-05 billion to $91.5 billion in 2011.
“Any other country would take it as a serious topic of discussion as it depreciates the Indian currency against the dollar. But here, it was cited that the bulge in current account deficit was due to oil imports,” he noted.