Budget: Constraints for FM

There is much hope that there would be something for everyone in the forthcoming Union Budget as the government seeks to provide a boost to the economy. The promises made in the Elections Manifesto do inspire such hopes which may be hard to satisfy in this Budget. Both consumption and investment are just about stable and there is need for the government to provide a push. But just how much can the government do?
Some economists have asked for a booster through a fiscal stimulus, it looks unlikely that the government will go for it and increase the deficit to 4% with the additional spending being on infrastructure. There is hence limited scope at the practical end.
For consumption, the government has already implemented the kisan cash scheme that involves cash transfers to farmers which would be Rs 87,000 cr for the entire year. This is a good amount to provide some impetus from the rural economy which was missing last year when the prices of crops came down leading to erosion in their income and spending power. This has to be balanced with the possible revenue loss. Also such a move has to be done in conjunction with the GST Council where tax rates need to be rationalised. A decision on this will be eagerly awaited.
On the investment side, India Inc will be eagerly waiting to see if there are any concessions given on investment as well as corporate tax rate.
Two interesting sources of finance this year will be the RBI and disinvestment. There has been enough debate on whether or not RBI reserves need to be transferred to the government, which could range from Rs 1-2 lakh crores.
The other major source of finance would be disinvestment which has been projected at Rs 85,000 cr but could be stretched to a higher level if needed.
The GST earnings are still an uncertainty and have been quite volatile last year and it may take another year to really settle down to a steady state flow of revenue. The uncertainty in monsoons so far could be a sore point along the way which also means that for the present no economies on social expenditure can be expected.
Therefore, we may not expect any major changes in the structure this time. But it would be useful if the FM not just announces a roadmap for the next four years but also timelines as the expectations that are raised need to be realised.