Kochi: The Union Budget should not have neglected the irrigation and flood management sectors, the mainstays of our agrarian economy, eminent economist Sudipto Mundle has said.
The agriculture sector had been the worst-affected due to demonetization and neglecting it would have an adverse impact in the long term, especially in view of the failing monsoon, he said at the 18th Malayala Manorama Budget Lecture in Kochi on Monday.
"This neglect of irrigation and flood management sectors is unfortunate. This could have been easily possible if the government had slightly increased the fiscal deficit," he said.
The fiscal deficit of 3.2 percent pegged in the Budget was not enough to offset the adverse impacts triggered by demonetization. "I would say that finance minister Arun Jaitley was overly conservative and could have allowed for a slightly higher fiscal deficit to offset the effects of demonetization,” Mundle said.
However, the Budget provided relief to real the estate sector that was also hit badly by the demonetization of Rs 500 and Rs 1,000 notes.
A member of the 14th finance commission, Mundle welcomed the government move to invest further in infrastructure for the development of roads and highways.
An emeritus professor at the National Institute of Public Finance and Policy, New Delhi, Mundle said the Budget had no answers for the job losses and decline in economic activity triggered by demonetization.
Mundle said the rollout of the Goods and Services Tax (GST) would be biggest game changer after the liberalization move of 1991. The effects of demonetization and the postponement of the GST rollout prevented the Budget from the being a ‘Big Bang Budget’ that it was touted to be, he concluded.
Budget in the times of demonetization
A young student who was present for the lecture quizzed him on the measures he would have taken ahead of the demonetization declaration. "Currencies were withdrawn earlier too and most of the time, we were not even aware of it. When you remove X money from the market, there should be a Y currency to replace it. There should have been more preparation in printing of notes and recalibration of ATMs – it was a disastrous administrative failure!" he answered.