We do live in unusual times. Some of us may be inclined to call these disruptive times. Technologically speaking, we may be close to achieving disruptions in Internet of Things and Artificial Intelligence. Politically, the year 2016 has been a year of black swans globally, and in India, we have seen the economy purportedly growing at the fastest clip in the world, but failing to create jobs. We ended the year on the controversial demonetisation exercise, where policymakers turned disruptors. Disruptions do not follow precedents, and hence, do not offer themselves to analysis based on extrapolation of past experiences.
So we now have an external environment fraught with unprecedented uncertainties in which our politico-economic planning, better known as ´budgeting´, has got done. The major unknowns were two new factors of the government´s own making - potential introduction of GST mid-year, and preponement of the Budget Session by a month to 1st February. These injected further complications in forecasting indirect tax revenues, and in estimating FY17 year-end numbers, respectively. There is also a looming revival in commodity prices (read petroleum prices), to contend with. Nothing can be done by the government to change these realities. We can now turn our attention on what should have been, and what were the conflicting demands on the government´s resources, and how, if at all, was a balance found among these expectations.
Creation of jobs remains a top priority, and this could be done relatively quickly by boosting infrastructure-building investments. At least some of the jobs lost in the informal construction sector due to demonetisation could have been recouped. The Budget has allocated Rs 3.96 lakh crore on infrastructure, up 80 per cent from the Rs 2.21 lakh crore of the previous Budget. But if we add last year´s Railways´ Capex Budget (subsumed in this year´s Budget) of Rs 55,000 crore, the hike is around 40 per cent. Take for example the roads sector, where the provision has gone up from Rs 64,900 crore in 2017-18 as against the budgetary Rs 57, 976 crore allocated in 2016-17 - an increase of just 5-6 per cent when adjusted for inflation. Even so, if execution capability improves across the board, and the allocations are actually spent, we can expect a boost in infrastructure construction, although not on a huge scale as demanded by our economic situation.
Again, the share of government spending on education has consistently fallen over the last three years, from 4.57 per cent of the Budget in 2013-14, to 4.14 per cent and 3.75 per cent and finally 3.71 per cent in the 2017/18 Budgets. If this trend is reflective of our current social priorities, then we shall be moving farther and farther away from giving opportunities to our deprived children. Education and health are infrastructure sectors that can be neglected only at great risk to our tomorrows. The biggest disappointment has been the total disregard in accounting for the aftermath of demonetisation, and the failure to propose any follow-up actions with any teeth, to curb corruption. Most disruptive forces are just disruptive, and not transformational. In the absence of long-term thinking and follow-up actions, the demonetisation exercise and this Budget are not about to go down in history as extraordinary, and transformational efforts in economic planning, but are going to remain unsung as a Budget most ordinary, albeit in extraordinary times.