Ahead of the Budget session of the Parliament which kicks off today, The Quint spoke with economist Surjit Bhalla on his expectations from the Union Budget 2016. This Budget session will be followed by elections in several states. There is, therefore, the perception that the Budget may become a repository of subsidies and schemes. However, some experts like Bhalla beg to differ.
When asked to assess the reform agenda of the NDA government, Bhalla lauds the steps taken so far to contain fiscal deficit. “The macroeconomic picture of India today is the best I’ve ever seen,” he says. Moreover, he insists that it is likely to be a growth-friendly Budget. Offering tax sops may not be less than walking a tightrope, but the oil bonanza may encourage the government to opt for some bold moves.
Below is the transcript of Surjit Bhalla’s interview on Budget 2016:
As the Budget session draws near, the much talked about economic reforms are yet to see the light of day and with elections due in several states. There is fear that Budget 2016 may become a victim of subsidies and scheme raj. What are your expectations?
If the Budget meets with the populist concerns, I think I’ll be very disappointed and finally it will be proof that this government is no different than the Congress government. So my expectation is that this government is different than the Congress government and that they won’t fall for these narrow, populist goals or narrow populist policies.
Do you think it will be a tax-friendly Budget?
I think it’s going to be a growth-friendly Budget and being a tax-friendly Budget is part of it. Look, it’s a difficult task – you want to be growth-friendly, and you don’t want to miss taxes. At the same time you want to consolidate the fiscal side. I think we are lucky in terms of the price of oil, which is what this government has done. Between 2008-09 the price of oil fell by $100, the price that you pay also fell by substantial amount and subsidies were increased. Now the international price of oil has gone down from $110 to $30 and the price that you pay for oil has gone down by 9 percent. What the government has done is that it has absorbed all of the decline in the price of oil in terms of taxes, which will ensure fiscal consolidation.
Any word of advice on the divestment agenda of the government?
That has been a failure, so let’s not talk about divestment agenda. It’s been a complete failure in the sense that they said they would raise Rs 65,000 crore. while raising only Rs 12,000 crore. Again, look what’s happened to markets, stock prices. So, if I were the manager of the government, if I were the Finance Minister, and I saw all these oil taxes coming, I’d say look, I’ll get this divestment next year. So I think they have done the right thing.
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