If budgeting is a complex task, then interpreting the Union Budget can be dangerous, as the amount of fine print has to be looked at carefully. Finance Minister Nirmala Sitharaman’s fifth budget, and the current Bharatiya Janata Party-led government, a full-fledged government ahead of next year’s general election, ticks all the right boxes on the face of it. Inclusive growth that ensures prosperity for all, especially youth, women, farmers, other backward classes, scheduled castes and scheduled tribes, with a focus on infrastructure and investments that act as a multiplier for growth and employment policies enabling green or environmentally sustainable growth, rationalization of direct taxes including a series of concessions to the middle and salaried classes, and pensioners, and, most importantly, living on fiscal consolidation Done all this. Terming it as the “first budget in Amrit Kaal”, Ms Sitharaman sounded the poll bugle by stressing on the achievements of the ruling dispensation since 2014, when Prime Minister Narendra Modi first took office. Per capita income, he said, had more than doubled to 1.97 lakh as a result of the growth of the world’s fifth largest economy and the government’s efforts to ensure a better standard of living for all. He cited increased formalization of the economy and wider adoption of digital technologies, especially in the payments sector, as other important achievements.
With an eye on ‘India at 100’, Ms Sitharaman said, the budget proposals were aimed at realizing a “technology-driven and knowledge-based economy with strong public finances and a robust financial sector”. Emphasizing that the economic agenda to achieve this vision will need to focus on, inter alia, providing a strong impetus to growth and job creation, the Minister presented his budget proposals which spell out various schemes. This government’s trademark of describing was heavy on concise words, but relatively light on details. For example, PM Vikas or Pradhan Mantri Vishwakarma Kaushal Samman, for the first time, will provide a package of assistance aimed at helping traditional artisans and craftsmen or Vishwakarma improve the quality, scale and accessibility of their products. However, the specifics including the financial outlay and possible mechanics of implementation were not mentioned. Similarly, a ‘Mangrove Initiative for Shoreline Habitats and Tangible Income’ or ‘Mishti’, which aims to plant mangrove plantations along the coastline and on salt pan lands, calls for funding for “convergence between MGNREGA and a compensatory afforestation fund”. drop offs. With the flagship rural employment guarantee scheme, which was introduced during the tenure of the Congress-led United Progressive Alliance government, itself being denied budgetary support, it is difficult to fathom the extent to which the ecologically sensitive mangroves will be destroyed. How will the new defense and reproduction initiative be funded. The reduction in outlays comes at a time when the rural economy is yet to recover from the ravages of the pandemic, a fall in incomes from the uneven distribution of last year’s monsoon rains, and a higher impact of higher food inflation on households in the hinterland.
At the broadest level, expenditure on rural development in 2023-24 is budgeted at Rs 2.38 lakh crore, a marginal increase of 0.1 percentage point compared to 5.2% when compared to 5.3% of total expenditure. Previous Budget Estimates. Compared to the Revised Estimates, the outlay is 0.6 percentage points less. Food subsidies have also been cut sharply: at ₹1.97 lakh crore, this is about 5% less than the budget estimate for 2022-23 and 31% less than the revised estimate. To be sure, the government’s resolve on fiscal consolidation, especially after the COVID-19 pandemic had prompted it to spend more as revenue receipts declined amid the unprecedented economic contraction, Ms Sitharaman said. There was little leeway on the investment front once it had decided that the government would focus its resources on increasing public outlay on infrastructure and investment. Capital expenditure has been allocated ₹10 lakh crore, which is 33% higher than the budget estimate for this financial year. If one adds to the nearly ₹3.7 lakh crore earmarked for grants-in-aid to states for creation of capital assets, the Minister’s call to implement the force multiplier of government capital expenditure as the primary lever to spur economic activity is commendable. The intent becomes clearly apparent. , With global demand uncertain this year due to a slowdown in developed economies, as clearly stated in the Economic Survey, India’s domestic market will essentially have to act as a wall to the economy. Ms Sitharaman has also tried to woo the middle class through changes in personal income tax, which together with changes in customs duty, will cost the government Rs 37,000 crore in total direct tax revenue. Some of these changes are intended to leave more money in the hands of wage earners and pensioners, cash that budget planners hope will come back in the form of either savings or increased spending on significant consumption. The biggest beneficiaries of the income tax changes, however, are likely to be in the highest income bracket, where the effective rate has been cut by 3.74 percentage points, reinforcing the perception that this government bats for the rich.