MACRO TASKS IN THIS BUDGET AND BEYOND

A budget is not meant only for the ensuing year. Also, most major economic problems can't be resolved in a year. That's why a longer macroeconomic view is needed

- ARUN KUMAR

THERE are two views about the annual Union Budget. One says it is inconsequential, since nothing much can be done in a budget. Most expenditures are committed, leaving little freedom for policy change. The other view is that it is the single largest item in the economic calendar and has a substantial impact. Since it is the largest item, whether there is continuity or change, its impacts the economy either way.

Most analysts giving opinion on the budget are spokespersons for some business or the other. They take a narrow view of it. Namely, whether their business would benefit or not. Seldom do they take a wider view of the economy and analyse the impact of the budget provisions on the economy as a whole and on the big issues confronting the country. This view by definition is a macro view. It does not balance out various urgent and long-term requirements.

The macro view can help the country focus on major current issues like unemployment, price rise, poverty, inequality, investment, trade and nature of growth. These impact all economic activity, not just specific businesses. If the former is buoyant, so will the latter. This is a positive-sum game where everyone together benefits and India becomes a developed nation. In a zero-sum game, some benefit at the expense of the others.

Since demonetisation in 2016, the organised sector has grown at the expense of the unorganised one, which employs 94 percent of the workforce, in a zero-sum game. It is the cause of rising unemployment and inequality in the country, with consequent social and political strife and instability. Do we need to learn from the current happenings in the neighbourhood?