Thread by @sway_hi

A couple of my friends here wanted me to elaborate on what I liked about this budget compared to other budgets in the past. So, here goes my understanding of why this budget is one-of-a-kind! (1) @iamshinerk @NetraDaoo

Adversity is the mother of invention: We came to this budget on the back of crippling economic situation in wake of the pandemic. The immediate focus was therefore revival of the economy.
1) The budget announced the fiscal stimulus route of govt expenditure to fuel growth! (2)

2) As mentioned by the honorable FM, the fiscal stimulus is going to happen through three sector focus, namely:
(a) Healthcare ; (b)BFSI ; (c) Infrastructure
3) These sectors have been chosen since they are by far the biggest employment generators! (3) @nsitharamanoffc

4) The other big employment generator is textile sector, therefore Textile parks which I believe is an idea that has been launched after consultation with @smritiirani ji
5) There have been tectonic reforms that have been mentioned : Insurance FDI limit increase to 74% - (4)

- And Bank privatization.
Both these reforms have been talked about for a decade and a half or more but budgets after budgets, timid FMs have bowed to coalition politics and refused to do anything on these. This budget however has belled the cat much like AB Vajpayee did-(5)

- When his govt rode India Shinning horse on the back of Infrastructure, Insurance and Telecom reforms. The prosperity ushered in by those reforms, ensured that we continued to coast in a decade of high growth despite Pranab Da's Fiscal Blunders and Chidu's infation monster.(6)

- This Govt has taken a leaf out of ABV's economic reforms. Reforms that have the power to usher in high growth that sustains over time, which is necessary for us to graduate to the developed bucket. (7) @nsitharaman @PMOIndia @narendramodi @BJP4India

6) Secondly the sectors in question will take care of the Fiscal Deficit problem, which most of the political pundits masquerading as economic wizards post budget, do not get.
- Fiscal Deficit simply put is the gap between the govt revenue and govt expenditure. (8)

- FM said that they would raise money for expenditure through the debt market, via bond instruments and use the Build - Operate -Transfer model, where the GoI acquires the land, builds the asset, say a toll road, operates it for sometime and then hands it over to pvt party (9)

- Investments in such Infrastructure appeals to Foreign Annuity, pension funds particularly, since they look at investing a lump sum amount and getting a steady income stream over time that mimics a bond coupon pay at attractive rates. (10) Thank you @nitin_gadkari ji

- This because there is a revenue shortfall owing to the pandemic. Since, the revenue comes from Direct Taxes (corporate tax, tax on salary) and Indirect Tax (GST), it follows therefore, that increase in employment/employers will increase revenue -(11)

- And as the revenue increases, the deficit will fall. Therefore govt's focus on mass employment generation through infra, healthcare, bfsi will feed into the downward spiral of fiscal deficit, which the poltical pundits are yet to grasp. Tut tut! (12)

- Now we come to the consumption bit. The govt has taken a bit of an oblique approach to this issue. They have gone ahead and made PF interest taxable, (by far the only sting in the budget) for everyone earning over 36 lakhs or so, knowing fully well that - (13)

- The PF act allows employees earning more than 15k per month to opt out of PF contribution rigmarole voluntarily. In other words, should this employee opt out of PF, he would add to the consumption increase, which is the point behind this decision in my opinion. (14)

7) Also one of the things that has been plaguing our BFSi sector for over 5 years now is NPA. The govt has come up with an ARC(Asset Restructuring Company) to handle the issue of Bank NPA. Additionally with the Insurance reforms, banks would now be able to liquidate - (15)

- the stake and money that they have tied up in Insurance JV. Therefore more money for banks and less need to constantly recapitalize banks thereby decreasing Fiscal Expenditure. Also bye-bye to Indira Gandhi Bank Nationalize yojana, a deed pending for decades. (16)

8) Also previous govts have over time used budget outlays to announce a slew of socialist schemes, Indira Gandhi blah blah yojana and used extra-budgetary resource (off the balance sheet) for various other things like food subsidy - (17)

- Not so for this government. Apart from a 30k crore contingency fund that the government has created for contingencies, everything else is allocated and accounted for in the budget balance sheet itself. (18)

9) Finally by far my most favorite point has been that they have not increased one more income deduction slab by creating a new investment deduction under the 80GGGGG, nor have they tinkered with the income tax slabs needlessly. (19)

11) As far as I am concerned this is one of the smartest budgets that I have had the good fortune of hearing. It is based on an understanding of money flow and behavioral economics, not on some dated model of socialism that should have died in 1950s! (20)