This Budget offers no dramatic tax cuts, no change in tax slabs nor even any tweak of the tax-exempt saving limit, and builds up government borrowings to the tune of 6.8% of GDP. Yet it has been a big hit: the stock market has gone through the roof. Why? Because it gives growth a big push, the one thing the Indian economy desperately needs, after a rampaging virus had eaten up nearly a tenth of the national output that had been shrinking even before the virus started to gnaw at it some 10 months ago.

It is natural for people to assess a budget by looking at what is in it. But the budget’s overall size and how it is financed matter more, from the point of view of economic growth, than its precise composition.

The 2021 Budget is huge: total expenditure is Rs 34.8 lakh crore, or 15.6% of the GDP forecast for 2021-22. India’s Budget in the recent past has not exceeded 13.5% of GDP. The extra spending in the coming fiscal is the kind of crisis response India needs.

Within this big rise in overall spending, the allocation for capital expenditure has gone up by 34%. Sure, a chunk of it is repayment of past loans and some fresh lending that need not end up in fixed capital formation.