The budget sent the stock markets tumbling and economists too are not very happy with it. Ravindra Dholakia, professor of economics at Indian Institute of Management-Ahmedabad and his wife Archana Dholakia, former professor of economics at Gujarat University feel that the government has lost a chance to improve the fiscal position. The duo also feels that the budget may lead to inflation.
“This budget has lost an opportunity to consolidate the fiscal position and adhere to fiscal prudence. This will ultimately result in a status-quo as far as real growth is concerned. It will also ignite inflationary pressure on the economy,” said Prof Ravindra Dholakia.
He said that we are facing an imminent threat of debt trap because we are not even trying to reduce non-interest deficit of revenue account, which is as high as 1% of GDP.
He said that the expenditure on totally avoidable unproductive consumption items have been unnecessarily raised by 40% to 150%.“This can result in distorting the structure of the economy, markets of factors of productions and lead to further corruption,” he said.
“This will only please local level politicians and bureaucrats at various levels. Higher fiscal deficit will create debt trap and upward pressure on interest rate and interest cost. This will give rise to unanticipated inflation that will be anti-poor and not anti poverty.”
Prof Archana Dholakia said she is disappointed with the announcement about less disinvestment.
“I would say that the finance minister has missed an opportunity for growth by bailing out lot of money for popular schemes rather than making solid efforts for economic growth and encouraging private investment.”She further said the disinvestment scenario was also not made clear by the minister.
“Around Rs25,000 crore worth of disinvestment was expected but the disinvestment figure is hardly Rs1,200 crore. This is not even 10% of what was expected. This is shocking,” said Archana Dholakia.
“There was a need to simplify customs and excise duties but these things have been made more complicated, which is anti-reforms. This budget has totally belied the expectations of an economist,” she said.
“It does not give much benefit to corporates apart from removal of the fringe benefit tax.”
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