Budget 2014: Marginal realignment of tactics to strategy

Abstract

The paper examines the restructuring of expenditure in the first budget of the new government, and its feasibility. It compares the increase in budget allocations for key macroeconomic aggregates and sectoral plan outlays for the BJP and UPAII interim budget, and the change from the interim budget. Although overall tactics are aligned to the strategy articulated, the alignment is only marginal as yet, because the various strands are not well integrated to tell a coherent story of how they work together, and changes are not quantitatively significant. This is unfortunate because the macroeconomic changes are aimed at raising growth and jobs. There are also small beginnings in better systems, incentives, composition of public spending and public services. Apart from contributing to growth these help improve equality through capacity creation so the economy does not hit sectoral bottlenecks, as happened with the past excessive share of consumption-inducing government expenditures. A performance in relation to a promise based index ranking of post reform governments shows that although the UPAII was worst, the first congress government was the best, with the BJP led NDA coming in third. So the BJP has to do better this time if it wants to improve its ranking.