(Ashok Malik is a columnist and writer living in Delhi.)
Arun Jaitley has produced a realistic, sustainable and politically honest Budget.
True, the usual theoreticians will carp this is not the so-called "big bang" Budget they hoped for, but frankly, florid and exaggerated expectations can almost never be met.
If Jaitley had produced this budget in 2005, as Finance Minister in a re-elected Vajpayee government, one could have called it tepid, given the fiscal conditions, the economic foundations and the global situation then. In 2015, he doesn't have that luxury.
His first full Budget has kept him occupied in cleaning up the mess of the UPA years, apparent for instance in the deferring - and perhaps someday killing - of the investor-hostile General Anti-Avoidance Rule (GAAR) provisions suggested by Pranab Mukherjee as Finance Minister. GAAR, along with the infamous retrospective tax, was a hallmark of the Budget of 2012. Three years and two Finance Ministers later, India is still fixing the damage.
Given this backdrop, Jaitley's Budget has been exemplary. He has done his utmost to re-start the investment cycle by pushing or incentivising more money in the direction of infrastructure - roads, ports, railways - including by using the instrument of tax-free bonds. While encouraging 'Make in India' - in the digital/electronics space, in defence equipment and in railways - he has been mindful that big manufacturing in India is not going to produce the volumes of jobs that low-end manufacturing created in China and South East Asia in the 1990s.
As such, he has promoted, in more than one initiative, funding for start-ups and for small-and-medium enterprises. He hopes this will help Indians become "job creators rather than job seekers" and give an impetus to entrepreneurialism at the bottom, or more accurately, the middle of the pyramid.
Similarly, a bankruptcy law and a new regulatory framework that will take away the need to secure multiple permissions before setting up a manufacturing unit may not sound particularly exciting at first glance. Yet, these are very important in making India a more inviting place for business.
This Budget has laid down a road-map and enunciated a philosophy. It has not reduced corporate taxes immediately, but envisaged a Budget four years down the line, when the peak corporate tax rate will be 25 per cent and all exemptions - distortions and write-offs that are susceptible to lobbying and political favouritism, and are expensive and inefficient to administer - will be removed. Though it has not been stated, it is obvious that the peak individual tax rate in four years will also need to be brought down to 25 per cent - if nothing else then to prevent tax arbitrage by the non-salaried and the self-employed.
In terms of fiscal consolidation, Jaitley has stuck to the medium-term goal of a fiscal deficit of three per cent of GDP - but in three years, rather than two. This will give him breathing space and allow him to spend that much more to boost public investment and domestic demand.
Jaitley is a cautious, careful man, a person who often emphasises predictability and the absence of abrupt and unpleasant surprises in tax structures and fiscal policies. In this Budget, he has set benchmarks for the rest of his term.
For housing, school and medical facilities, he has set targets right up to 2022, the 75th year of India's independence. In that sense, the direction of his government is clear very early in the day.
Narendra Modi takes election manifestoes seriously. During the 2014 campaign, he repeatedly said the BJP should not commit to anything that it wasn't confident of delivering or showing appreciable advance on in five years. This genuineness in intent and purpose has defined the 2015 Budget as well.
Take the black money issue, which Jaitley referred to more than once, particularly in a long paragraph towards the end of his speech. The new measures, including on concealed income at home or assets abroad leading to a maximum of 10 years in prison, are tough. They are politically very potent as well.
Federalism and devolution of powers and responsibilities to the states has also seen words being matched by deeds. How else can one explain that 62 per cent of all tax receipts in the country will henceforth go to state governments? This is an unprecedented number. It is now for state governments to up their game.
Finally, the Budget needs to be seen not in isolation but as part of a package that includes the Economic Survey and the half-dozen key economic bills pending in Parliament. All of these are crucial and all of them add up to a lot more than the value of the individual parts. In previous years, irrespective of the party in power, the Economic Survey has been an aspirational wish-list, a literary account by the Chief Economic Advisor of the day of what the government should do or ideally needs to do. The Budget that has followed has usually fallen short of the Economic Survey, turning out to be a compromise document that answers immediate political exigencies and sidesteps the long-term ambition of the Economic Survey.
In that sense, 2015 has been different - and Jaitley has been that much more honest. His Budget mirrors the narrative of Arvind Subramanian's Economic Survey and is entirely consistent with it. This is a refreshing departure from the mismatch of previous years.
With Jaitley, you don't get grandiose statements. He is not P Chidambaram or Montek Singh Ahluwalia, who spent 10 years promising the moon. In the economic regime of Jaitley - and Modi - what you see is what you get. India will be glad of that.
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