Speaking in the same voice

Would these two take away big chunks of the expectations around the budget, this year? The fiscal numbers for next fiscal have certainly acquired a salience never seen in the run-up to any Indian budget. So the crisp indicators in the Review of the Economy could tell us exactly what to expect before the actual figures are released on February 28.

The bank licences too are possibly the tallest economic reform measure for the UPA-II government other than the roll out of Aadhaar, and certainly the most important in the capital market space. The buzz around them has been enormous as a result and would certainly share more floor space compared with most other Budget announcements.

The similarity of views on the Budget numbers and those in the Review should however be a reason for comfort. Last year the Review by C Rangarajan and his team had made some very prescient diagnosis of the looming fiscal problems, few of which were taken up in the budget showing up the enormous gulf which separated the Prime Minister and the then finance minister's team. On taxation of cross border transactions the PMEAC had asked for residence-based taxation to be introduced in the Direct Tax Code Bill in the Budget. Instead the finance ministry had changed the foundation of the tax laws going to the other extreme of chasing non-residents.

This time around, there is no doubt there will be no repeat of such cacophony. As the third quarter review of the credit policy by the RBI has already shown, the vital wings of the government are coming around to the same page. This is particularly necessary in a year which has been an obstacle course worse than what steeple chasers run into.

Discordant voices speaking about fiscal measures have given way to a unified acknowledgment of the challenge the Indian economy has not faced since 1991. For instance, containing the consolidated deficit of the Centre and States to 5.4 per cent of the GDP within 2014-15 as per the new fiscal responsibility and budget management despite making additional provision on education, healthcare and food security would require an adjustment of almost 5 to 6 percentage points of GDP.

Subhomoy is a Deputy Editor based in New Delhi.

subhomoy.bhattacharjee@expressindia.com

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