Neeraj Hatekar, Director of Dept of Economics at Mumbai University and visiting faculty at Meghnad Desai Academy of Economics weighed in on this year’s Union Budget. Here’s what he had to say.
I think there were three or four challenges before the Finance Minister. Firstly the crisis in the rural sector because of three years of consistent drought. Second, the stagnation in the manufacturing sector and private investment and the third would be the bad balance sheets of banks.
He has tackled the first issue fairly well – by encouraging expenditure on rural development and I’m happy about the changed attitude the government has shown regarding MGNREGA. The manufacturing sector investment has only been partly tackled because if we generate more rural income there’ll be more of a demand for a manufacturing sector which plays a big role in relieving rural distress by creating jobs on its own which one does not see very strongly.
Lastly, they’ve done virtually nothing for banks’ balance sheets. One was also looking for some steps towards a bankruptcy law. There was some intent about increasing the tax net and taxing the super-rich, but it is only intent. The noise is there, but one doesn’t see anything concrete.