My take on budget. There were three big changes in budgeting. First, capex has been boosted massively by 0.6-0.8% of GDP in FY21-22 compared to previous steady state avg. Some of it is optical like loans to railways to cover losses and a buffer to address overruns.

But direction is right & very promising. Second, a big chunk of off budget spending on food, fertiliser subsidies has been brought into budget. This improves transparency, ensures timely payment of dues and also enables discussion of budget trade offs between subsidies and capex.

But without a move to accrual based budgeting a reversion to off budget shenanigans cannot be ruled out. But let’s hope that the fin minister holds the line on this transparency principle. Third, revenue projections have been made conservatively which is a change from past.

Gross Tax/gdp in fy22 is budgeted lower than fy20 and that’s lowballing the potential for tax buoyancy. Non tax revenues are also budgeted modestly without assuming windfall from spectrum auctions. This could lead to revenue surprises and that would give good options to Govt.

In past aggressive projections for taxes and deficits have led to disappointments and forced cuts in capex. Now capex should be insulated from such pressures. So overall the philosophy of budgeting has changed and I hope the FM and the ministry will stay the course.

Overall I would give high marks to this budget but that’s not for headline spending and deficit nos. Remember lot of it is because of clean up & kitchen sinking of dues and that won’t add to fiscal impulse. But the approach is in right direction and now the key is implementation.

Among other things the new privatisation policy including on banks sounds very promising. I am sceptical about bad bank and DFI so let’s see. Lot of other tweaks for infra financing and a a step towards asset monetisation. Which are all very welcome.

My one complaint is about new Agri infra cess. Should avoid new levies and in fact we should remove the plethora of cesses and surcharges. Because these shortchange the states. Would have also preferred a cut in petrol, diesel taxes and prices. But guess one can’t have it all.