CEA Nageswaran defends Budget, says reforms can now only be incremental

V - Anantha Nageswaran

Chief Economic Adviser V Anantha Nageswaran has defended the 2023-24 Budget for not containing big reforms, saying any further reforms can only be incremental.

"The bulk of product market, external sector, and financial sector reforms have been done in the previous 20-30 years. And therefore whatever that needs to happen is by definition incremental in nature and many of them do lie in the realm of states as well," Nageswaran said on February 6.

The chief economic adviser was presenting the Centre's view in a post-Budget discussion with think tanks.

Nageswaran said two key measures announced in the Budget had not got the attention they deserved: payments to micro, small, and medium enterprises becoming eligible for expense deduction by buyers only after the payments have been made, and certain ease of doing business and living reforms, such as a common business identifier, or the single touchpoint to update Aadhaar and Know-Your-Customer details.

"Day to day, people spend a lot of time on these things. Those have been addressed in the budget," Nageswaran said.

Income tax system faces flak

The chief economic adviser also fended off criticism that the two income tax regimes being presented to taxpayers were making the entire filing process more complex.

"Options are given, and in a democracy, if you expand the optionality to citizens, I would expect that it should be welcomed," Nageswaran said. He argued that if youngsters wanted to use the new system as they didn't own a house and didn't need to use the relevant deduction, they could do so, and then move to the old system in the future.

As long as individuals don't have business income, they can move between the two income tax regimes as many times as they want.

Asked to explain why the Budget estimate for next year's disinvestment proceeds was pegged at just Rs 51,000 crore, Nageswaran said disinvestment is neither a mechanical decision nor just about political capital.

"It's also a question of market conditions and investor appetite and interest. We should also consider what the government is getting in terms of dividend and other revenues from the public sector," he said.