Macroeconomic Analysis of the Union Budget 1998-99

Abstract

There were several expectations as well as apprehensions about the maiden budget of the newly elected coalition government led by the BJP. This paper by Bakul Dholakia presents a critical appraisal of the macroeconomic aspects of the Union Budget 1998-99. According to Dholakia, the budget lacks the necessary focus as it tries to achieve a wide ranging array of highly ambitious objectives. The most disappointing feature of the budget is the reversal of the process of fiscal reforms. The fiscal deficit-GDP ratio is likely to increase sharply to 6.7 per cent. The author's post-budget macroeconomic forecast reveals that the Finance Ministry's rather optimistic projections of economic growth? inflation, and fiscal discipline during 1998-99 are most unlikely to materialize. Given such a highly protectionist and inflationary budget, only some sort of a miracle can pull the Indian industry out of the current recessionary trend. � 1998, � 1998 SAGE Publications.