Incongruence between Announcements and Allocations

A scrutiny of the Indian economy and the state of public finances reveals that while there are a few areas of improvement under the current government, the economy remains fragile and, worryingly, the situation has worsened in some other respects. It was hoped that the Union Budget 2018–19 would take measures to address some of these concerns but these expectations have been belied. Budget 2018–19, possibly with an eye on elections, has made grand announcements instead of taking hard decisions and making adequate allocations towards key sectors of the economy.

The authors would like to thank Manali Phatak for excellent research assistance.

The Finance Minister, Arun Jaitley, in his Budget Speech 2018–19, has been quite effusive in praising his own government’s performance over the past four years. Specifically, he mentions: (i) India’s high economic growth rate; (ii) rising foreign direct investment; (iii) improvement in the ease of doing business; (iv) a significant improvement in the growth of the manufacturing sector; and (v) rising exports. The finance minister also takes credit for the improvement in public finances.

The finance minister and the National Democratic Alliance (NDA) government, in general, have been at pains to point out that the economy is now in a much better shape than it was under the previous United Progressive Alliance (UPA) governments. It is worth examining some of these claims of the government to see whether these stand up to scrutiny.