March 1, 2013
Abstract: The budget for 2013-2014 has been assessed in terms of the government’s objective to cater to the needs of three key constituencies i.e., politicians (to win upcoming elections), rating agencies (to attract stable capital inflows) and reformists (to address adverse growth inflation combination). In the absence of particularly favourable macroeconomic conditions, the government had to do a balancing job, since the interests of any constituency could be promoted only at the expense of others.
For example, the government resisted the temptation to announce initiatives with immediate political payoffs but high fiscal costs. Instead, it emphasised on skills and employment, which has a constructive appeal to a voter demographic that will increasingly dominate the political process over the next several years. Foreign investors will be reassured that the fiscal deficit is in line with expectations and subsidies are relatively small, notwithstanding the political risks. On growth inflation balance, with regard to food, there are initiatives to encourage crop diversification and more efficient water management.
Keywords: government budget; national budget; deficit; debt