ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Well-Intentioned Budget

The Budget for 2001-2002 is certainly not wanting in terms of good intentions and a thrust in the right directions. The main question is whether these intentions are likely to be translated into reality.

Union finance minister, Yashwant Sinha, deserves to be congratulated for his forward-looking, growth-oriented and reformist budget. The budget is certainly not wanting in terms of good intentions and a thrust in the right directions. The main question is whether these intentions are likely to be translated into reality. The finance minister should also have appropriately addressed a few more important concerns which have a large bearing on future growth prospects and the quality of life in the country.

The budget takes credit for the fact that, for the first time in many years, the fiscal deficit target fixed at 5.1 per cent in the Budget for 2000-2001 has indeed been achieved. However, the combined fiscal deficit of the states and the centre continues at about 10 per cent of the GDP. It is unfortunate that the state government budgets do not attract even a fraction of the public attention that the central budget does. But the trends in respect of resource mobilisation and fiscal deficits in the state budgets presented so far are unnerving. The figure of 10 per cent referred to above does not include the large fiscal deficit of urban local bodies brought out in the report of the Eleventh Finance Commission. A recent study shows that if the deficits of local bodies are also counted, the total deficit may be over 15 per cent of GDP.1

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