Good for the poor, good for the middle class and process-centric
The Union Budget 2018-19 is a continuation of what the Government has already been doing and, therefore, it focuses on fiscal consolidation, promotion of infrastructure and their collective goods and individual initiatives — things like availability of cooking gas, electricity et.al. All of this is what the Government has been doing since 2014.
Do we not think that it is good for the poor that there is electricity, lPG, availability of cooking gas as well as focus on the 150 aspirational districtsIJ Isn’t that good for the poorIJ There is a significant standard deduction. If you’re salaried, you know that you had to submit bills for transportation, for medical care. Now, those bills have gone and now they have been replaced by a substantial deduction. Do we not think that’s good for the middle classIJ
The Budget is not a sudden event. I repeat, it is an expansion of what the Government has been doing. So, the health scheme is a (major) expansion of the health insurance scheme that already existed. If questions are being raised that there may be implementation issues, well, there are in everything, whatever the scheme. But just because of potential implementation issues, does that mean that one should not do something. And why should we necessarily presume that there is going to be an implementation issueIJ
As for the divestment target of Rs 80,000 crore for 2018-19, what was the disinvestment target in 2017-18IJ Was it not exceededIJ Therefore, why should anyone presume that Rs 80,000 crore for 2018-19 will not be metIJ It will be. As for questions about Air India, these are based on assumptions; as if the Budget is something that just fell from the sky. It is a continuation. Even before today, the Government has been explaining, the Finance Minister has been explaining, that there is an (ongoing) process for Air-India. let’s not use the word privatisation. More precisely, I would say ‘disinvestment/privatisation’ and again today he said that. So, there will be a process.
On corporate tax, my request to all is don’t bring in the global thing because if you bring that in, then (the question becomes) whether the people who are arguing for tax rates benchmarked to global ones will, equally, accept global wage ratesIJ Each country has different price for different things. The price of labour will be relatively lower in India. Price of capital will be relatively higher. So, let’s not bring in the global part. When the Finance Minister mentioned corporate tax rate reduction up to 25 per cent, not below 25 per cent, he mentioned removal of exemptions. How ready is the so-called corporate sector for elimination of exemptionsIJ So, unless one is prepared to accept elimination of exemption, how can there be an argument of reducing it to below 25 per centIJ
The digital push is once again something that’s been going on for some time. The process continues apace and there is data to show that digitisation and the use of digital payment is increasing over time. In terms of the questions being asked about urbanisation and smart cities, well, that’s the point: What is smart is to be determined by the citizens. Therefore, citizens have to deliver a plan in consultation with local Governments. That takes time. And there was a competition and the choice (of smart cities) was made on the basis of a third-party mechanism. Now, very little of Government money, unlike something like old JNNURM, is being thrown at the smart city mission. The DPRs were for the first lot of cities was out on September. If anyone suddenly expects a ‘smart city’ that would be unreasonable. And it’s not about implementation taking time. I have explained the process of the smart city. There is competition, third-party vetting, smart city selections and after that bids are invited. It’s not about the implementation but the process, which is inclusive and citizen-focused.
(Bibek Debroy is Chairman of the Prime Minister’s Economic Advisory Council; excerpts from an interview to The Pioneer)