The budget speech has been delivered. And, it was a long speech. The Finance Minister made several literary references. Quoting Kashmiri poet, Dina Nath Kaul, she said that everything the government did was for the “payara vatan” or beloved country. Quoting Tamil poet Avvaiyar she said ‘tend to the land, before you take from it’. Quoting Tamil poet Thiruvalluvar she reaffirmed the 5 jewels of a great nation – freedom from epidemics and illness; wealth; bountiful agriculture, happiness and security. Quoting Sanskrit poet Kalidasa she spoke about the sun collecting vapour from drops of water and said that the King does the same – only takes what is needed and gives back copiously. The reference to the poets, unfortunately, was the only creative aspect of the speech, which seemed long on aspiration and short on how to get there.

With the given state of the economy, with GDP growth declining, inflation rising, and unemployment going up – one was expecting bold measures from the Finance Minister. A bit of creativity, a bit of jugglery – a means of punching a way out of the economic mess. However, the budget stopped a long way from that.

At the very basic, it was expected that the Finance Minister would announce a tax cut, that will put some money back in the hands of the consumer. This would, in turn, spur demand, and as demand rose, factories will kick start – or come out of stasis – to meet that demand. When this happens, there will be a rise in employment – as factories hire people. This in turn will bring more money into the economy, in the way of income – and the virtuous cycle of growth will start again. Or that was the expectation.

The finance minister did oblige us with a tax cut or sorts. So instead of the earlier complex system, replete with exemptions; we now have two systems. One with fewer, higher, tax slabs and lots of exemptions – and the second with lots of lower tax slabs, and no exemptions. The individual tax payer has to choose one or the other. Right now it appears that the lower tax slabs will end up costing you more in taxes than the higher tax slabs. Though it will take April’s salary – for those who have a job and pay taxes on their salary – to find out if one really benefits or not. Right now, it doesn’t seem that this activity would have any impact on the growth of consumption or the generation of wealth.

The second thing that was expected of the government was a boost to the rural economy, which is in acute distress. Rural India accounts for about 66% of India’s unemployment. One of the key drivers of rural growth in India has been the MGNERGA safety net. MGNREGA, started in 2005, was aimed at providing livelihood security for all adults who can perform manual unskilled labour. For long, it has been the buffer against economic downturns that hit India. It is this minimum guarantee of work and wages, that guarantees atleast a 100 days of work a year – that has been the bulwark against hunger and abject poverty. In a bad year for the economy, instead of bolstering the MGNREGA allocation to provide more rural relief, the allocation to MGNREGA has been cut by 13% – from 71,000 crore in FY 19-20, to 61,500 crores for the coming financial year.

  Nirmala Sitharaman was caught between a rock and a hard place. At one end is the growing fiscal deficit that needs to be curtailed, and the other the need to revive the economy with strategic initiatives that boost consumption, employment and growth. Right now, it seems that the government is doing an accounting and allocating exercise, rather than strategic planning for the future.

There still doesn’t seem to be a roadmap to get out of the mess that we are in. A mess that was triggered by demonetisation, exacerbated by a poorly thought through GST, and compounded by a global downturn. The imagination and insights, not to mention the compassion needed to look at the economy from a micro perspective, putting the citizen at the front and centre of all policy, has not taken off. What we have is more of the same. Right now, that is not going to cut any ice in reviving animal spirits. And, that is the problem.