A sip, or a large gulp from the poisoned chalice?

Congratulations Ms Nirmala Sitharaman for being appointed the new Finance Minister of India, the second woman to occupy the post after Indira Gandhi. Whether this leads to greater glory or is a poisoned chalice remains to be seen. Today's headlines make grim reading. Economic growth fell to 5.8% in the last quarter of the last financial year ending on 31 March and "India's per-capita income increased 10% to Rs 10,534 per month in 2018-19 from Rs 9,580 in FY19. The per-capita income is an indicator of the prosperity of a country." By that indicator Indians are very poor. This is about half of Rs 21,000 per month, which is the lowest threshold for paying income tax, and converts to a paltry $150 per month. Unemployment is at a 45 year high, said the National Statistical Office (NSO) but, "This is a new design and uses new metric and it would be unfair to compare it with the past," said Pravin Srivastava, chief statistician. In January, PC Mohanan and J Meenakshi resigned from the National Statistical Commission (NSC) over suppression of unemployment figures. GDP growth fell "as demand for cars and consumer goods slumped, while farm output contracted". "We expect growth to lift in fiscal 2020, particularly from the second half over a weak base, as normal monsoon, softer interest rates and budgetary measures kick in to support consumption," said an economist. The monsoon is expected to be below normal over North and South India this year. However, rainfall over the country as a whole is expected to be normal. Does it mean that other areas will have excess rainfall, leading to floods? Ms Sitharaman is to present a full budget on 5 July but she has been preempted already. The first cabinet meeting announced extension of PM-Kisan scheme of Rs 6,000 handout per year to all 145 million farmers and a pension scheme for 100 million farmers. A new pension scheme was also announced for 30 million traders with turnover of less than Rs 15 million per year. Fortunately for the new finance minister, the government said that it has met its fiscal deficit target of 3.4% in the last financial year. This was done by reducing expenditure by Rs 1.5 trillion and by postponing payment of bills, such as those of the Food Corporation of India, to this budget. Foreign Direct Investment (FDI) fell by 1% in the last fiscal, and India is to lose its tax benefits under the Generalized System of Preferences program on $5.6 billion of exports to the US. Business leaders would love a reduction of corporate tax rate to 25% and they are pleading for a stable tax regime with no sudden changes, as has been the practice so far. Fat chance of that. Tax terrorism will continue as Modi continues with rampant handouts to keep the Congress out. The poisoned chalice is very deep indeed.