Prospects for the New Year

The Centre is painting a rosy picture of the economy in the coming financial year beginning March, 2018. Before taking a glimpse into the future, it is relevant to recall that the Government’s much tom-tomed decision to change the financial year (April to March) to the calendar year (January to December) and to introduce this change right from this year, has been given a decent burial. Nobody is talking about it anymore. The annual budget that will be presented in February this year will be for the period April, 2018 to March, 2019. As 2019 will be the year of the general election, the proposed changing of the financial year may again be given a quiet go-by.
The hard economic reality does not conform to the rosy picture that the Government, especially the Finance Minister, is projecting. Hard facts given by the Government itself fly in the face of any contrived optimism. For example, the difference between expenditure and revenue of the Union Government in the period April to November, 2017, had reached Rs. 6.12 lakh crore. Collection from the Goods and Services Tax (GST) was the lowest in November, 2017, which means the Government will have to resort to a fresh market borrowing of at least Rs. 50,000 crore which the Finance Minister had assured the country he would never do. Turning to revenue deficit, the grim picture is that in the nine month period from April to November, 2017, it stood at 152.5 per cent of the budget amount, with four more months to go in the current fiscal. The situation is equally dismal on the fiscal deficit front. At the beginning of the current fiscal, it was decided to keep the fiscal deficit at 3.5 per cent. By November it had exceeded that. The index of industrial production also has shown sign of a vigorous growth.
As the people feel the increasing privation in their daily life, with the Government reducing interest on fixed deposits and small savings schemes, while the Damocles’ sword of Financial Resolution and Deposit Insurance Bill hangs on them, threatening to take away a part of their hard-earned money deposited in banks. The Government has still not been much troubled by the sense of disillusionment of the people, mainly because the Opposition is disunited and has failed to come up with an alternative agenda of development. But this may change, posing a fresh challenge to the ruling party in the election year. Personal charisma of the leader may not be enough to ride the electoral storm.

Tuesday, 9 January, 2018