Budget in the Time of Change-Reflections on Restructuring

Budget in the Time of Change Reflections on Restructuring Kaushik Basu This essay evaluates the 1991-92 budget and the larger reforms from a particular point of view. This point of view supports industrial liberalisation, freer trade regimes and an exchange rate policy which aims to establish current-account convertibility of the rupee in the near future. These policies are supported not because equity does not matter but because it does. The equity objective emphasises a second set of desirable policies. These consist of direct public action for the poor. While such action is urged on a much larger scale than has been undertaken thus far, it should be direct in the sense that its market-distortionary effect is as small as possible.