Last December, Chief Economic Advisor Arvind Subramanian called for cranking up public spending for growth in the wake of the private sector’s capacity to invest being constrained in the Mid-Year Economic Analysis, which introduced ‘Modinomics’ to the budget discussions in the Finance Ministry.
He also proposed that the Ministry abandon over-emphasis on fiscal consolidation. For creating the additional fiscal space for funding infrastructure investment, Union Finance Minister Arun Jaitley moved amendments to the Fiscal Responsibility and Budget Management (FRBM) Act in the Finance Bill in Saturday’s budget.
“Rushing into, or insisting on, a pre-set time-table for fiscal consolidation pro-cyclically would, in my opinion, not be pro-growth,” Mr. Jaitley said in his speech.
“I want to underscore that my government still remains firm on achieving the medium term target of 3 per cent of GDP, but that journey has to take account of the need to increase public investment,” Mr. Jaitley said in his budget speech.
The government managed to keep the fiscal deficit within the target of 4.1 per cent of the GDP for 2014-15, but for the next three years, it has new targets of 3.9 per cent for 2015-16, 3.5 per cent for 2016-17, and 3.0 per cent for 2017-18.
Taxation 
