Tax measures are a mixed bag with some positive and negative factors but with a net effect that is mildly positive
Pre-budget discussions and the economic survey threw up a number of issues that could potentially be included in the Budget – agriculture, education, health and political populism – or be resolved in the budget – fiscal expansion and stimulus to investment, employment, growth. How does the budget pan out in the light of these expectations?
While responding to widespread demands for the Union government to respond to problems affecting agriculture, education, health and employment, the Budget has correctly tried to combine expenditure allocations and tax incentives with policy reforms that will stimulate greater efficiency and increase effectiveness. For instance, in agriculture, a NITI commuter will examine and suggest reforms in external and domestic policies that will stimulate agricultural exports and enhance the production of horticulture and non-crop agriculture. Similarly, education quality is sought to be improved through teacher training, digitalisation and e-learning.
The successful fixed employment scheme in textiles is proposed to be extended to other labour-intensive export sectors like leather goods and shoes. Employee Pension Fund (EPF) incentives for formal employment have also been improved and extended.
For me, the biggest disappointment is the overshooting of deficit targets for current and next fiscal years. Even though there are known reasons for tax and non-tax revenue shortfalls, a more aggressive disinvestment could have overcome them.
Tax measures are a mixed bag with some positive and negative factors but with a net effect that is mildly positive.
(The author is ex-chief economic advisor, Ministry of Finance, and former executive director of IMF. He is currently president of Forum for Strategic Initiative and Chintan)
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 "Arvind Virmani")
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