The ideas and schemes announced in the budget are consistent with the analysis that the economic survey had provided us on Monday.
Consequently, the message is – all is well, and we do not have to do anything significantly to accelerate growth or solve problems that households and businesses face, particularly lower and middle-income households and MSMEs.
As for MSMEs, the belief is that credit will solve all their problems. And for households, the argument seems to be that Rs 30,000 crores relief will help accelerate consumption as well as savings.
Employment Linked Incentive schemes will help people and employers only if the employers need that many people to be employed. If the private consumption expenditure continues to grow at low rates and private sector capital expenditure does not grow as expected, the country will not need the estimated number of workers, i.e., 210 lakhs. Economic survey mentions that we do not need more than eighty lakh jobs per year in any case.
The internship programme is a good idea, but will the top 500 firms need an average of 4,000 apprentices per year for the next five years? Given that the government support is limited, is the scheme attractive for employers and employees?
The urban development proposals are likely to push up real-estate prices and consequently the cost of doing business and living. We have had no or limited success with PPPs in the past. We will, therefore, need to see if the new provisions for the proposed viability gap funding schemes address the old problems.
One noticeable feature of budget proposals is that we are likely to see an increased participation of multilateral agencies in financing infrastructure projects.
The government continues to focus on fiscal consolidation and, therefore, we may not see greater public investment even during the next few years. In short, the budget is growth neutral and does not make a sincere effort to address key problems facing the country.