How to pack for the journey to 2047

livemint.com:

Mint presents several articles that identify some of the areas where changes are needed. Each will involve a combination of policies and programmes, and the details can only evolve over time. This article focuses specifically on the Budget and what signals it could send.

First, I suggest some standard macroeconomic tests which the budget must pass. I then turn to some areas where a new approach is needed and which are more controversial. Viksit Bharat, understood as reaching developed country status, requires 8%-plus growth on average for the next 23 years! The economy did record an average of 8% growth in the last three years, but that was the recovery from the pandemic.

The average over the last six years is only 4.9%. This can and should be improved, but most international agencies project that India will grow at 6.5% over the next few years. The Budget is not the place to present long-term growth targets, but some indication of the growth on which it is based is needed.

As Martin Wolf of Financial Times recently pointed out, even if we don’t achieve 8%-plus, but grow between 6.5% and 7%, we could still end up as one of the superpowers because other countries are expected to grow much more slowly. The Budget would do well to state a clear target of, say, 7% real growth on average for the next three years. Actual performance can then be measured against this target and policy corrections made as needed.

Fiscal deficit is the key target on the basis of which analysts judge macroeconomic stability, which in turn can affect investor perceptions. India’s fiscal deficit (Centre plus states combined) has been much higher than in most other developing countries. This means the Centre and state governments together take up a