By Vivek Pattanayak in Bhubaneswar, February 14, 2017 : Before the budget is placed there are anticipations, apprehensions, speculations, and also suggestions in the media, in the professional bodies and in the academia. When budget is presented there are reactions, disappointments, elation and also prognosis. After few days all the excitement is over until next budget period commences. In the country all thinking people are concerned about the national economy which is guided by myriads of factors political, social and international including the budget.

Budget is basically an estimate of income and estimate of expenditure. Since the central government is a big public organization, what it proposes to spend in what sector and how it plans to raise resource affects the country as a whole. Large-sized corporate houses play a big role in shaping the economy. They spend huge sums of money. They employ large body of people.They contribute to income of the governments both central and state by way of taxes, duties and other levies. MSME sector, small business and farmers play equally a big role. In additions, activities of banks, financial institutions, money lenders in the rural area do guide the economy.

It is also dependent upon financial market, stock exchange, bond market, money market and also foreign exchange market. Initial Public Issues (IPOs) and Follow up Public Issues (FPOs), raising of bonds and debenture whether convertible or non-convertible are part of capital market activities which influence business and industrial environment. Inflow and outflow of money through Foreign Institutional Investment (FIIs) and Foreign Direct Investment (FDIs) will guide the economy. More than any institution the role of the central bank, a statutory autonomous institution is tremendous as it determines monetary policy modifying repo rate and reverse repo rate, fixing Statutory Liquidity Reserve, Cash Reserve Ratio and determining currency flow and its withdrawal.

For last several years technology itself has made all the difference to the working of the national economy as well as to the global economy with Internet, cloud computing, search engines and mobile phones. The economies are interwoven and interconnected. National economy is not free from what is happening outside the country.

The exports of India have not done well in the last one year with global demand having tapered. US economy has been the driving economy in the world due its sheer size for decades. Europe also played a dominant role. China in the last two decades had given an unprecedented boost to the global economy. Since sub-prime crisis USA and Europe have not fully recovered in spite of liberal doses of Quantitative Easing. Except on few occasions US economy has not shown any signs of spectacular recovery.Europe after severe financial crisis in Portugal, Ireland, Greece and Spain (PIGS) with periodic threats of Grexit has suffered a severe body blow since Brexit. China’s growth has declined.

Election in USA with Donald Trump coming to power having his agenda of America First, with border tax adjustment, executive order on H1B visa, a new uncertainty has been added to the already gloomy global economic picture. These will affect our trade and have impact on current account. Return of large number of highly qualified professionals now serving in USA would impinge on our already challenging unemployment situation.

India had enjoyed low oil price since 2014 reducing our import bill and enabling the government to give occasional relief to a large number of consumers. For last few months oil price is on upward swing with OPEC deciding to cut production. What impact it would have on the economy if price goes back to pre-2014 level?

Inflow and outflow of FII has shown high degree of volatility with the American Federal Reserve having made one upward revision of rate, and it might make at least one more which would prompt flow back of money from emerging market. Although media gives a lot of attention to Sensex and Nifty, but it should be realized that rise and fall of stock price in the secondary market should not mislead us as it affects only minuscule fragment of the population who are retail share-holders.

Interest rate cut is always brought to focus by the media. Will rate cut bring in new investment? It will most certainly increase profits for corporates. There was a rate cut only few months ago. Did it bring any promise of new project?

Emerging markets consist of much vaunted BRICS and Philippines, Indonesia, Turkey, Mexico which drive the global economy in addition to Asian tigers like South Korea, and Taiwan and also to some degree Thailand. Within BRICS since Goa summit there is watering down of cohesion with China and India not remaining on the same page on political agenda. Brazil after impeachment of Russedolf, following scams and scandals involving oil behemoth, Petrobas with an interim President in Michel Temer does not have the political gumption for the present to revive a decadent economy.

South Africa under President Zuma overshadowed by a cloud of scandal is unable to provide the type of leadership an icon like Mandela gave enjoying the respect of wealthy whites and admiration of the poverty stricken black Africans.Russia is facing sanction from the West since its Ukrainian intervention. It is also knee-deep in its military involvement to support Bashar backed regime in Syria.Turkey in the background of a failed coup with disastrous consequences for the military and vulnerable to repeated terrorist attacks is enmeshed in Syrian war and also fighting against militant Kurds. Its political leadership is in no position to give stimulus to its economy with all the potentialities it had developed during the period of a stable, secular, strong, and modern liberal democracy.

Mexico with a bullying neighbour faced with severe governance problem connected to drug mafia having a sway will not give any succour to the somnolent global economy. With NAFTA under threat the Mexican economy would nose dive. South Korea, unfortunately ridden by a debilitating scam, cannot show economic vigour which gave it the sobriquet of an Asian tiger. How Philippines would perform under much controversial President having insulted USA and then unable to accept the rising China making a defiant claim of south China sea is yet to be seen. Indonesia has oil, other natural resources and manpower and it is a growing economy but caught up with Islamic fundamentalism .

From the above description how does one find any ray of hope from any part of the globe to prime the Indian economy?

Banks in India have acquired NPAs to an astronomical proportion. Rate of growth of bank credit has been the lowest in several decades. Unemployment rate is the highest in last ten years. The Indian companies are still not out of woods.

Will the present budget resuscitate the economy? Its emphasis on MGNREGA – a pro-poor programme has tremendous potential to create an atmosphere of rural alacrity. Its success depends upon the States implementing the scheme. What is needed is good cooperation and constant coordination between the State governments and central government. Political understanding will have to precede officials to work in tandem.

India dependent upon rain god for its agricultural production has to diversify agriculture, resort to dry land farming and provide irrigation. Last year emphasis had been given on irrigation. What result has emanated out of this priority? How has the government both at centre and States handled rural migration? Have they created employment opportunity to find jobs for the rural youth by encouraging agro-based industries? Have they made attempts towards establishment of cold storages and agricultural warehouses to preserve food grains and give the farmers appropriate price to make the agriculture profitable?

Although India was the beacon of hope of IMF and World Bank last year, their assessment after the demonetization is not the same. By itself India has a huge market. It showed dynamic growth between 2005 and 2010 attracting FDI and FII. Much publicized scams created an environment which could not attract investment. It paralyzed bureaucracy. Leadership of executive went into dalliance by default. Other institutions took over. New government came with a promise of job creation, clean government, Make in India, Digital India, Start Up India and Stand Up India.

Although two and half years have passed it could not change land acquisition law, its effort to bring in GST is still work in progress, Make in India continues to be a slogan. Start Up India is floundering with lackluster angel funding. Demonetization compelled the leadership to call for digitization. Index of ease of doing business could only go up by one position with all the efforts of simplification of procedures and rules.It could not have a working arrangement with judiciary leaving a large number of judicial posts vacant. There are confrontations between states and centre and blame game.

Is there an atmosphere for economic growth? It is a vexing question for all.