Is Predicting the Budget a Waste of Time?

27 January, 2023 0 Comments

            Is Predicting the Budget a Waste of Time?

Brief History

18th Feb 1860
The Budget was initially presented to the British Crown on 18th Feb 1860, by Scottish economist and politician James Wilson from the East India Company. (Source: ET)
26th Nov 1947
Independent India’s First Budget
The first budget for independent India was presented on 26th November 1947, by R K Shanmukham Chetty, the finance minister at the time.
28th Feb 1973
Black Budget
Due to a 550 crore rupee fiscal deficit in FY1973-74, Yashwantrao B. Chavan's budget, presented during the Indira Gandhi government, was called the "Black Budget". India was in severe financial distress at the time.
17th Jun 1977
Shortest Budget Speech
Hirubhai Mulljibhai Patel, then finance minister’s, budget speech in FY1977-78 had the shortest budget speech in history (800 words).
28th Feb 1986
Carrot & Stick Budget
VP Singh presented a Union budget marking the beginning of the end of license raj in India. Dubbed the "Carrot and Stick" budget (both rewards and punishments were included), it implemented the MODVAT (Modified Value Added Tax) credit to reduce the cascading effect of tax that consumers had to pay while also launching an aggressive campaign against smugglers, black marketers, and tax evaders.
28th Feb 1987
The Gandhi Budget
Presented by Shri Rajiv Gandhi, then Prime Minister and Finance Minister, highly profitable companies that were legally avoiding paying income tax were brought into the tax regime. Following that, it became a major source of revenue for the government.
24th Jul 1991
Epochal Budget
Dr. Manmohan Singh, Finance Minister in the Narasimha Rao government, presented this one. Introduction of LPG (i.e. Liberalization, Privatization & Globalization) was a landmark reform in the Indian Economy. The import-export policy was overhauled in this budget. It also reduced import licensing and encouraged exports with optimal import compression. The Indian industry was thus exposed to global competition. This also has the record of most number of words in a budget speech.
28th Feb 1997
Dream Budget
Presented by P Chidambaram, the "Dream Budget" laid out the road map for major reforms such as lower personal income tax & corporate taxes, voluntary disclosure of income, simplified excise duty structure etc.
29th Feb 2000
The Millennium Budget
Finance Minister Yashwant Sinha presented this budget with the intention of promoting India as a major software hub. The introduction of software export accelerated the growth of the Indian IT industry.
28th Feb 2002
The Rollback Budget
This infamous Budget of Yashwant Sinha, finance minister in the then-NDA government, became known as the “Rollback Budget” due to his capitulating to pressure from both opposition parties and his own party to roll back several proposals.
28th Feb 2009
Budget for Crisis Management
Dr. Pranab Mukherjee budget in 2009 focused on bringing economic growth back from the global financial crisis started in 2008. India went through an economic downturn and our fiscal deficit went up from 2.7% to 6.8% of GDP.
01st Feb 2017
End of A Colonial Tradition
Arun Jaitley presented the Union budget of FY2017-18 on 1st Feb departing from the colonial-era tradition of using the last working day of that month. He merged the railway budget into the main budget as well.
01st Feb 2020
Longest Budget Speech
Nirmala Sitaraman delivered the record longest budget speech (2hr. 42mins). She introduced the new tax regime and abrogation of DDT dividend distribution tax and many more tax reforms in this budget.
01st Feb 2021
Once-in-a-century Budget
A year post the Covid-19 pandemic, when the country witnessed the sharpest fall in economic activities, the 2021 budget was expected to drive economic revival via investing in infrastructure and healthcare, while relying on an aggressive privatization strategy and robust tax collections.

Then vs Now

No more excitement
No more excitement

Since independence, numerous developments and reforms have shaped the Indian economy through Union Budgets. Prior to 2017, Budget Day used to be exciting as there were frequent tweaks in the tax structure every year, especially tweaking of custom & excise duty for different products.

People in various industries and sectors closely monitored these changes, and the equity markets reacted aggressively to them as well. Aside from the union budget, changes in state wise VAT were also tracked. However, such excitement no longer exists following the implementation of GST.

Earlier, the railway budget came separately, more a political tool where announcement of new trains and routes were made in the home state of either the railway minister or states where elections were around the corner for political dividend. However, from 2017, the then finance minister Shri Arun Jaitley merged the railway budget with the main budget and the focus shifted to infrastructure development, efforts put to reduce delays, the focus was on efficiency and implementation rather than the announcements.

With respect to govt capex, currently the plans are focused for long-term spendings with huge capex and hence we do not see new announcements every year and as a result, headlines are reduced.

Still Relevant
Still Relevant

Apart from the big picture, the budget is still relevant for the following reasons.

  • Macro Parameters like Govt Borrowing, Fiscal Deficit, percentage of fiscal deficit to GDP etc.
  • Agriculture - subsidies for farmers, and agriculture related benefits & announcements
  • Manufacturing – incentives for different manufacturing industries like the PLI scheme
  • Sectors like import oriented industries still exposed to custom duty variations.
  • Spend on Health & Education, Allocation towards various central govt sponsored schemes like rural employment through MGNREGA etc.

People involved with these sectors are still excited to attend the budget day and pockets of equity markets react to the allocations in their respective sectors.

Our Expectations
Our Expectations
  • Corporate tax – No significant change in corporate tax structure and Govt should provide stability in the policies.
  • Direct Tax – No meaningful change in recent years except the new tax regime introduced in 2021 budget. Government may announce additional tax concession to make the new tax regime attractive.
  • Borrowing Target – FY 2022-23 has been a great year in terms of direct tax collection and GST collection. Quantum of borrowings would now be a function of GDP growth presumption, expected inflation, targeted tax collections, new disinvestments, and announcement of subsidies. It will be interesting to see the fiscal deficit target as a percentage of our GDP.
  • Infrastructure spends – There is an uptrend of government capex in infrastructure and defense manufacturing. This momentum should continue.


Tweaks in the tax structure have been a key focus point for observers in budget sessions prior to 2017. However, post implementation of GST, the space for these reforms have reduced. Although the budget expectations and announcements are not as exciting when compared to earlier budget sessions, it could still be relevant to various people for various reasons.

For More Details Contact :  Mr. Rajanish -  +91 9900130321 |  Mr. Saisri -  +91 9740013581 |  Email -