Budget lacked vision, admits PM’s economic aide Ashima Goyal

Mumbai: The Union Budget was "disappointing" as it lacked a vision, though measures like relaxing the fiscal deficit target and simplifying income tax are positives, the PM's economic advisory council member Ashima Goyal has said.

Goyal, who is a part-time member of the Economic Advisory Council to the Prime Minister, also said that it was a "surprise" not to have a mention of the word 'slowdown' in the nearly three-hour long speech by Finance Minister Nirmala Sitharaman.

The budget document is a "balancing act" between fiscal stimulus to drive growth and the need to be responsible on spending, she said at the Indira Gandhi Institute for Development Research over the weekend. "Overall it (Budget) was disappointing because they didn't bring out the vision as a first real budget of a new government. It had to give a vision," the eminent economist said.

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India's GDP growth is expected to slip to a decadal low of 5 per cent this fiscal, pressured by domestic factors like drop in consumption, as well as global issues.

"The surprising thing is that coming at a time when everybody is disturbed about a slowdown, the word slowdown is not used at all in an almost three-hour long speech. There was no discussion on how the Budget is going to attack slowdown," Goyal said.

She further said Sitharaman was in a "catch-22" situation from the word go in the Budget making process, wherein any action would have left someone unhappy. However, the finance minister has achieved a "balancing act" through her moves, Goyal said.

She elaborated that by adopting the 'exit clause' under the Fiscal Responsibility and Budget Management (FRBM) Act, the government gave a stimulus to growth and yet affirmed commitment to rules against fiscal profligacy.

To drive the point further, she said a 0.5 percentage point relaxation in fiscal deficit target offered under the exit clause makes lot of resources available, considering that the overall size of the economy is nearly USD 3 trillion.

Goyal also welcomed the government's resolve not to adopt policies similar to the response following the 2008 financial crisis.

She said in 2008-09, the fiscal deficit had gone up by 4 percentage points and the interest rates were also taken to record lows to stimulate growth.

There is also an attempt by the government to direct expenditure more towards capital expenditure, which suggests that the quality of the fiscal deficit is better now.