Our budget speeches reflect the evolution of government policy

The central government sets policy dialogue and priorities for the development of the economy. This is an important role, as the limited resources of a developing country must be put to optimum use to improve common prosperity. In the absence of clear focus areas, government policy can be ineffective, markets can be confused and voters can be disenfranchised.

Budget speeches in India are much more than announcing tax rate changes and allocation of funds for government programmes. They incorporate the central government’s view on the state of the economy and focus areas to drive growth and welfare.

Budget analysts usually focus on the numbers (fiscal deficit, disinvestment target, welfare spending, etc.). But the themes, words and idioms in the budget speeches also throw light on the development of the policy of the central government. We analyze a sample of budget speeches from the early 1990s to capture such changes in the pace of government programs and policies.

For this exercise, we take two budget speeches from the beginning of each decade since 1990 (i.e. 1990-91 and 1991-92, 2000-2001 and 2001-2002, 2010-11 and 2011-12, and 2021-22 and 2022). Let’s add -23) and analyze the frequency of word usage in each decade. The keywords unique to the budget speeches of each decade are grouped into topics and we analyze their usage patterns in successive decades. The details of the methodology are available on the CSEP website.

Our analysis shows that budget speeches in India focus on eight broad themes. These are: (i) infrastructure, (ii) technology and innovation, (iii) social security, (iv) human development, (v) food and agriculture, (vi) demography, (vii) fiscal policy and (viii) national Promotion income. Budget speeches show that over the past few decades, India’s economic policy has moved towards building more infrastructure, adopting digital innovation and rapid urbanisation, and providing better education and healthcare to the country’s vast population.

While the emphasis placed on these areas has changed, the broad goals of economic policy have remained the same over the decades. This reflects the ideological similarity between political parties in India when it comes to economic policy.

Announcements of infrastructure projects like new railway lines, national highways, rural roads and port development have been an important part of our budget speeches. India’s gross fixed capital formation (GFCF) as a share of GDP (at current prices) has grown from 23% in the 1990s to 28% in the 2000s and 30% in the 2010s; Our GFCF is expected to be 29% of GDP in 2022-23. The central government aims to double its capital expenditure to 3.3% of GDP in 2023-24 from an average of 1.7% of GDP in 2010.

The increasing focus on infrastructure is also reflected in the budget speeches of the last three years. Budget speeches over the past decades talked about building infrastructure like roads and ports. There has been an increased emphasis on connecting and creating synergies between existing infrastructure, with increasing mention of metros, freight corridors, logistics and, more recently, the Gati Shakti programme, which aims to improve coordination of infrastructure projects.

Over the past 30 years, the central government has steadily embraced advances in digital technology to improve governance and delivery of welfare services. Between 2010 and 2020, the number of internet subscribers grew from 20 million to 830 million, and the share of electronic payments in total retail payments (in value terms) is projected to grow from 11% to 86%. ‘Digital’ was among the most used words in the last three budget speeches. In recent speeches, ‘faceless and paperless’ tax assessment was announced and domestic mobile phone manufacturing was promoted.

Recent budget speeches reveal the pressure of the Center to adapt and mitigate the threats of anthropogenic climate change. Efforts to fight climate change increased in the early 2010s, with speeches focusing on expanding forest cover and the adoption of green technologies. The focus has increased in the early 2020s, as the budget for this decade calls for massively increasing solar generation capacity, reducing carbon emissions and encouraging sustainable mobility.

The proportion of India’s population living in urban areas has increased from 25% to 35% in the last three decades. This change is also visible in the budget speeches, as the mention of ‘rural’ has become less frequent, while the word ‘urban’ has become one of the most used words in recent speeches. Similarly, the mention of items related to food and agriculture has reduced, although the budget speeches continue to appeal to ‘farmers’ as before.

Welfare delivery is an important component of budget speeches. In welfare delivery, there has been an increased focus on human development through health and education, while social security such as pensions and food seems to have decreased. Cumulatively ‘health’ and ‘education’ were mentioned 29 and 37 times in the late 1990s and early 2000s, increasing to 70 in the early 2020s. In the most recent budget, the emphasis has been on skilling and training across industries.

From 2019-20 onwards, the government’s narrative has become more focused on building infrastructure, promoting digitization and ensuring targeted welfare delivery. These are worthy objectives and the Centre’s performance on these fronts should be continuously tracked and evaluated, as the 1991-92 budget speech still spoke of India emerging as a major economic power.

Ayush Khare and Shruti Gupta are former research associate and research analyst at the Center for Social and Economic Progress (CSEP), respectively.