#105 The 2021 Union Budget 🎧

<em>This newsletter is really a public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: </em><strong><em>how do I think about a particular public policy problem/solution?</em></strong><br/><br/><em>PS: If you enjoy listening instead of reading, we have this edition available as an audio narration on all podcasting platforms courtesy the good folks at </em><a target="_blank" href="https://www.ad-auris.com/"><em>Ad-Auris</em></a><em>. If you have any feedback, please send it to us.</em><br/><br/>- <em>RSJ</em><br/><br/>The <a target="_blank" href="https://economictimes.indiatimes.com/news/economy/policy/fy22-budget-will-be-made-in-a-manner-never-seen-in-a-100-years-in-india-nirmala-sitharaman/articleshow/79800820.cms?from=mdr">once in a century budget </a>is now behind us. The reaction to it has been positive even among those who tend to be sceptical about the economic management of this government. What we are interested now is to understand if the budget portends a more fundamental shift in the economic policy or the outlook of this government.<br/><br/>Quick Take<br/><br/>As a newsletter, we like to avoid quick takes on events. But this time around a quick take is unavoidable. Here’s our take:<br/><br/><em>First</em>, after a long time, we have had a budget that is transparent about the finances of the government. The expectations following a year like we have just had were low. The government has used it to present a tough but true picture of its finances. The fiscal deficit for FY21 (the current year) is pegged at 9.5 per cent of GDP. The deficit for FY22 is estimated to be 6.8 per cent and the glide path to a 4.5 per cent target in FY 26 has been laid out. This will mean a deviation from the FRBM Act. The government plans to submit a fiscal deviation statement