Macroeconomic factors look under control, but may hide a slow growing economy underneath.
Union Budget 2017-18 – Compulsions of the situation
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The objective of the Union budget should be that it should be meaningful for the people and responsible in its approach. The allocations made to different sectors in the 2017 budget seem to be in accordance with the requirements of the economy in the present condition. The FM has shown adequate awareness about the government interventions required for the economy. The FM has taken credit for the low BoP deficit and inflation, but the same is a sign of a slowing growth of the economy. Demonetisation has been defended in the budget but there is no reference to the economic uncertainty caused by it. Also the claims about the long-term gains have not been substantiated. The macroeconomic credentials of the budget are quite impressive with a greater thrust on capital spending and a greater devolution to the states. The budget needs to be expanded when the economy slows down and contracted when it speeds up. That is exactly what this budget has tried to do. However, efforts should have been made to contain revenue deficit. This, in effect, indicates that we are borrowing to consume. Some may argue that the higher allocations for agriculture mean that the govt. has seemingly given up on its most ambitious ‘Make in India’ scheme. Some others may see it as an eye of the govt. (BJP for that matter) on the coming assembly polls. You can refer to Bodhi resources page for downloading the PDFs of Economic Survey and Union Budget.
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