“If sentiments are low and people are not confident about their income and jobs in the future then they will not spend.”
Much of what is to be expected in the budget depends on the diagnosis of the problem because the budget, at the end of the day, is a prescription, says India’s numbers veteran and former statistician Pronab Sen.
Sharing his diagnosis of the what ails the economy, he tells Financial Express.com that it is really about “raising the sentiment and boosting the confidence of both investors and consumers, which at the moment seems low. There is no fundamental or structural problem at the moment.”
He feels if India needs to get to the GDP growth rate it needs, which is 7.5 per cent to 8 per cent, then the priority should be to address the issue low level of investor and consumer confidence about the future. “We need to build that up and convey a feel of consistency in policies. So, it is more about affecting sentiments than about any real structural reform.”
But then, he also reminds that it would be unfair to expect one budget to do this. “One budget cannot do this. Sentiments need policy consistency over three to four years and therefore what the budget should ideally be doing is explaining why the budget is on track to meet that game plan,” he says.
His message is that consumption and investments are outcomes and if sentiments are low and people are not confident about their income and jobs, and those of their children, in the future then they will not spend.