Budget 2017: Minister Jaitley vs Mr Jaitley

A quick look at how alike—and unlike—the national budget is from a family budget.


If he is prudent, Mr Jaitley will never manage his family finances in this manner.

But Minister Jaitley, or any finance minister, can get away by doing what a family cannot do. He is allowed to borrow the entire shortfall between his current income and expenses — irrespective of the fact that there is an outstanding debt of 68.9 lakh crore to be repaid.

Part of the blame for finance ministers being so ‘irresponsible’ with country’s finances lies with you, the taxpayer, who is also a voter.

Most voters want finance ministers to cut taxes (income) and increase spending. The only way to do that is by borrowing.

When a government borrows more than it can repay from its current income, it borrows from our children to spend on us.

A deficit is not bad if it is within reasonable limits and funds physical and human capital that increase future income.

It’s like a young couple taking a home and a car loan that it repays from future income, instead of passing on the liability to their children.

Economists say a country shouldn’t have revenue deficit (current spending more than current income), but can run a fiscal deficit to help increase capital spending beyond capital and revenue receipts. India has been struggling to turn its revenue deficit into a surplus.