A pre-election budget was expected to be populist. On the face of it with large expenditures announced for agriculture, for employment generation, for social security, and fiscal slippage, it would seem to be a populist budget. But the nature of the expenditure increase and the slippage taken in context suggest that fiscal consolidation remains in place.
Inclusion is essential for sustainable growth. But only active inclusion is sustainable. Active inclusion is that which increases capabilities and allows more people to contribute to and participate in the benefits of growth. Expenditure on agricultural productivity, health and education, employment and MSME credit will all aid active inclusion.
As the last budget before the elections it does send a clear signal of working towards empowerment and active inclusion, where the attempt is to make working, living and doing business simpler, while better-targeted direct benefit transfers help those unable to work.
Composition of expenditure
The overall expenditure increase is at 12 per cent, very much in line with expected nominal GDP growth of 11.5 per cent.
Despite structural changes, the last year showed considerable tax buoyancy that will be enhanced in the next year. Even a modest increase in total expenditure allows a $2.5-trillion economy to spend large absolute amounts. The impact of the expenditure can be enhanced if it is well designed.
While expenditure on subsidies, for example petroleum, remains capped, there are large increases in spending for infrastructure, on reducing vulnerability (health), and increasing human capacity (education). Public expenditure that creates public assets has a higher and more persistent growth multiplier compared to the public consumption expenditure multiplier, because, apart from maintaining demand, it also reduces costs. Expenditure on non-tradeables also leaks less abroad.
Is the promised increase in minimum support prices (MSP) potentially inflationary? Large increases given by the previous government contributed to maintaining high food and general inflation. This government has kept the MSP increase low, which contributed to reducing inflation.
There are two alleviating factors today. First, a general glut in agriculture will tend to moderate overall price increase. Second, past and ongoing action on the supply-side, which is increasing productivity and lowering cost of production, will moderate price increase despite giving a higher mark-up on costs. Sensitivity of overall inflation to food inflation makes increasing agricultural productivity especially important.
Fiscal deficit ratio this year has come in at 3.5 per cent (target 3.2) and is projected for 3.3 next year, marginally above the agreed-to fiscal deficit reduction path, which would have taken the FD ratio to 3 per cent next year.
However, the departure is marginal and credibility is maintained for two reasons. First, the recommendations of the new FRBM (Fiscal Responsibility and Budget Management) committee have been accepted with respect to a debt reduction path to a 40 per cent debt ratio and reaching a 3 per cent FD ratio by 2021. Second, even the FRBM committee had allowed a 0.5 percentage point departure from the FD target in a year of structural change. And a year when GST is introduced is a year of major structural change when slippages in revenue targets are to be expected. The deviation is small, less than that 0.5 percentage point.
Markets were also worried about government borrowing, with rates on benchmark 10-year g-secs hardening to above 7 per cent when the repo rate is at 6 per cent. But this budget should assuage market worries. With signs of a recovery in growth and real interest rates falling, debt ratios will fall faster. The gross borrowing requirement at ₹6.3 trillion is only marginally above last year’s ₹6 trillion, and should be absorbed in a growing market. Net market borrowing is ₹4.62 trillion, only marginally above market expectations.
The tax buoyancy visible from GST and the rise in direct taxes may actually reduce borrowing requirement over the year. Moreover, in a booming equity market the Government may be able to raise more than the modest ₹80,000 crore estimated from disinvestment. This year they raised ₹1 lakh crore, exceeding their target for the first time, and by a massive ₹25,000 crore. Measures for innovative financing and selling ready assets to raise money for new investment and channeling more long-term savings, such as pension funds Indian and foreign, to infrastructure, will also help in financing expenditure without straining markets.
Incentives and governance
As they say, the way to hell is paved with good intentions. The latter do not matter unless they can be translated into actual achievements. However, there are measures that improve governance and incentives.
The budget continues and consolidates tax reform to widen the tax base and lower taxes. This improves incentives for compliance, pushing India towards a norm where all pay reasonable taxes. Corporate tax has been cut to 25 per cent for 99 per cent of firms. This will help MSMEs and job-creating entrepreneurship. There are tax incentives to increase employment.
There are measures to improve coordination across government departments to improve ease of doing business, such as the creation of a special logistics cell, and to encourage States to compete and improve the delivery of public services.
The grandfathering clause for the long-term capital gains tax on equity investment has helped markets absorb it without over-reacting. This, together with higher tax exemptions on income from fixed deposits will help even the playing field between different assets and discourage households from entering narrow markets at high price earnings ratios. This is good for financial stability.
More, however, could have been done in this critical area. Payments to farmers could be made conditional on phyto-sanitary measures that would improve the acceptability of agricultural exports. There was nothing on increasing finances available to urban local bodies. This is essential to support urbanisation.
While education was emphasised, the word ‘skills’ was barely mentioned in the budget speech. The absence of appropriate training is becoming a critical bottleneck in transferring youth out of farm jobs, which is essential to raising rural incomes.
There are problems such as certification requirements that the informal sector cannot satisfy, the absence of industry standards, or entry restrictions as in medical education that prevent government funds available for training being well used. Just increasing expenditure allocation is inadequate. These aspects need to be addressed.
The writer is a part-time member EAC-PM. The views are personal
Before you place a vacancy with a recruitment consultancy, it is a good idea to spend some time evaluating exactly what you require from a candidate. A job specification is a detailed description of the role, including all responsibilities, objectives, and requirements. A person specification is a profile of your ideal new employee, including skills, experience, and personality type.
Why they help
Writing a detailed specification forces you to think about exactly what skills and experience are required for your role and the type of person you want for the team of EssayTyper. Giving your recruitment consultant a comprehensive brief will allow them to work more effectively and quickly in finding you the perfect candidate.
Specifications also give candidates a better idea of exactly what you are looking for. This can help to weed out inappropriate applications from people who might be suitable on paper, but not actually that interested in the role. They also help to manage the expectations of successful new employees and to avoid situations where they feel they have been misled about the exact nature of the role.
You can use the specifications as a checklist for evaluating CVs and in interviews, which will save you preparation time and make sure you don’t miss anything.
Writing a specification can make you think about how your department works and provide you with an opportunity to shift responsibilities around to maximise efficiency.
Specifications are also useful after the vacancy has been filled, as they can help to assess a new recruit's performance and to determine their future training needs.
Things to bear in mind before you start
Be as specific as possible about the responsibilities of the job, including any deadlines for delivery and measurements of success.
Leave room for flexibility within the job specification, and make it obvious if the role is likely to change or grow in the near future. This helps to avoid employees resenting taking on responsibilities not in their original job description.
Be careful with your wording, eg. is a qualification really required or would someone who is Qualified by Experience (QBE) still be suitable?
It is essential not to discriminate on grounds of gender, age, ethnicity, sexuality, or health, so avoid any inappropriate requirements, eg “must have x years’ experience” or words such as “dynamic” or “mature”.
If the role is involved with service delivery, you may want to ask a selection of your clients their opinions on the type of person they would prefer to work with.
What should a job specification include?
- the job title and the position in the company, including their line manager and any other members of staff reporting to them
- a summary of the general nature, main purpose, and objectives of the job
- a list of the main duties or tasks of the employee
- which skills/qualifications are essential and which are desirable, plus
any equipment or software requirements, eg “knowledge of Raiser’s Edge”
- examples of typical projects help to illustrate the requirements
What should a person specification include?
- the technical, organisational, communicative, and creative skills and abilities you expect from an ideal candidate
- any specific qualifications or education required for the role
- the level of experience needed in either similar organisations or equivalent roles
- the kind of personality that would fit in with your team, and with your organisation’s ethos
- character traits that are likely to help them to do the job effectively
- any preferred achievements, eg. volunteering
http://www.tpp.co.uk – agency specialising in not-for-profit recruitment