Finally. Finally! The Modi government has acknowledged the futility of trying to pump prime India’s GDP by ever-escalating government expenditure, which increased by an astonishing double-digit CAGR (compounded annual growth rate) over six years of impotent growth. Remember, Indian governments drive only 10 percent of our economy – worse, they do so inefficiently and bluntly.
Finally, the Modi government has acknowledged that the budget presented on 5 July 2019 was a failed, vapid policy document.
Finally, it has realised that India’s private enterprise is the most potent engine of economic growth, accounting for over 90 percent of GDP.
And finally, after six excruciating years, it has shed its “I am the government and I can fix everything” stance and adopted the mantra of “I will free your animal spirits by empowering, trusting and enriching you.”
Finally!
The fiscal giveaway is an awe-inspiring 0.6 percent+ of GDP. Absolutely, it’s a generous Rs 1.45 lakh crore of additional cash created on corporate balance sheets. Optically, it’s a humongous 10 percentage points’ hack of the corporate tax rate by one swing of the axe (reminiscent of P Chidambaram’s audacious move in the “dream budget” of 1997/98 – ouch!).
Yes, I am delighted. But no, I am not ecstatic. Why? Listen to the podcast for the reasons.