“IT IS quite obvious that incremental change is not going to take us anywhere,” claimed Arun Jaitley, India’s finance minister, at the start of his 95-minute budget speech on February 28th. “We have to think of a quantum jump.” Mr Jaitley thus set the scene for a bold, visionary and reforming budget of the sort that would convince investors, foreign and home-grown, that India was a country on which to place long-term bets. The budget was undoubtedly a reforming one: Mr Jaitley announced a welter of initiatives, many of them ambitious, almost all conducive to economic growth. What was missing was vision of where it would all lead. There were plenty of strong threads in the budget, but Mr Jaitley missed a chance to twist them into a good yarn. One wondered what a more gifted speaker might have made of this material. 

The basic macro-economics of the budget were solid enough. The Reserve Bank of India (RBI) will soon have a formal inflation target enshrined in a new RBI Act, said Mr Jaitley. Yet it was odd that such an important reform was dashed off so quickly in the speech and with so little detail. Tax revenue in the current fiscal…Continue reading