Budget of tough calls

Unarguably, the Modi government faced its toughest Budget since 2014. Instead of unveiling a toolbox of defensive measures, it has opted to keep intact its undampened ambitions of infrastructure development and welfare measures. The Rs 5.54 lakh crore direct capital expenditure will have considerable knock-on effect on real estate and its supporting sectors while broadly maintaining outlays for food, fertiliser and petroleum subsidies and social sector programmes aim to cater to the farm sector and the bottom half of the pyramid. It has rightly heeded to the need for capacity building in health as well as allowed states to borrow more for capital expenditure. The record joblessness also deserved attention, even as the government has put its faith in growth leading to employment.

These government liabilities will be met through an unparalleled sale of PSUs and borrowings from the market. The PSU sale policy, not yet fully unveiled, promises to be more radical than the glimpse offered by Nirmala Sitharaman last year. Alongside, the stage is set for selling off nationalised banks and insurance companies. The pitfalls of rules being nudged or massaged have never before been starker as the government rushes to monetise existing public assets to live up to its outsized ambitions. And this demand on funds only partially accounts for the hardening of geostrategic circumstances along the border with China.

The government has its own explanation for a particular corporate house bagging a marquee Sri Lankan project or a bunch of airports. But the hazard of a cowboy approach to the country’s crown jewels — the financial and strategic sectors — will be more profound. The government must be fair in selections but also construct a firewall against concentration of resources, especially because the ongoing farm agitation has heightened the perception of New Delhi’s fondness for a particular set of entrepreneurs. The pressure to raise money in quick time is immense. Fiscal deficit this year is nearly thrice than budgeted and must be pared as soon as possible. Already, interest rates for Indian bonds have started hardening. Keeping up a brave front is half the battle. The remaining begins now.

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