OpinionsThe Maiden Amrit Kaal Budget for Inclusive Growth - I

The Maiden Amrit Kaal Budget for Inclusive Growth – I

Date:

Analysis

by Dr. Jaipal Singh

 

 

The Finance Minister Nirmala Sitaraman presented the Union Budget of India on 1st February 2023 in the Lower House of Parliament explaining the Budget Estimates (all anticipated revenues and expenditure) and associated schemes and programmes for the ensuing Financial Year 2023-24, along with the Revised Estimates 2022-23 on more realistic assessment towards the last quarter. For the majority people, budget is merely a routine statistical exercise and few people know that the budget is the key index and chief parameter to ascertain the progress and prosperity be it a national scenario or an ordinary household.

For the last two consecutive years, the Union budget was written and presented under the dark clouds of the Covid-19 pandemic, a very difficult phase not only for the Indian economy but also for the entire . The economy has shown some positive signs of recovery only during the current year, with the country remaining largely free from the coronavirus menace during the most part of the year. Apart from the disruptions and uncertainties caused by the pandemic, several other compelling factors such as consumer behavior, geo-politics, supply-chain issues, rapid climatic changes and a host of other factors influence the budget preparation and planning process these days.

In ordinary parlance, the Government of India Union Budget is defined as the estimation of all revenues and expenses of the particular financial year which is constantly assessed, compiled and voted by the Parliament after due evaluation in a periodic annual cycle. Few people know that in the organizational or national perspective, the budget is closely linked with the planning process based on short-, medium- and long-term requirements.

To further illustrate this point, India has an annual budget (short term plan), five-year plan (medium term plan) and perspective plan (long term plan) keeping focus on the requirements for the next fifteen years in view.

However, it is through the annual budgetary allocations that the government sets and highlights its output and outcome-based priorities carrying out the pace of the development and progress as per envisaged vision, mission and goal(s). A few markers of recent origin such as General Service Tax (GST), digital payments, deliverance of schemes, infrastructure roll-out, satellite imageries, to name just a few, too now play a vital role in the planning process. Keeping all such factors in view, the Union Budget 2023-24 has been presented as per the recent tradition in vogue and the author proposes to provide a brief analysis thereof under various disciplines and heads.

 

Analysis of the Union Budget

This year's Union Budget is significant and special because it is also the fifth and last budget of Prime Minister Narendra Modi led government's second successive stint. Since independence, the Union Budget has also been used as a tool for projecting the government's priorities on policy making, structures development plan and populist schemes, subsidies and freebies to attract common masses i.e. the middle class and poor people. For a well-meaning person, an ideal budget should be one that strikes a good balance between the estimated revenue receipts vis-à-vis expenditure with minimum or no deficit financing.

On the other hand, most of the corporate, businessmen, service class and ordinary folks look at the budget from their perspective i.e. how it suits their interest and what all is catered in the budget for their personal welfare and gain.

On their part, the government needs to consider all available resources and constraints while presenting a balanced budget taking into account interests of all classes simultaneously keeping in view that the deficit financing is kept to the minimum for the long term fiscal and discipline. In the following paragraphs, this author proposes to briefly analyze the perspectives of government as well as the target population.

  1. Budget Estimates 2023-24: A Bird's Eye View

The total budgeted expenditure in BE 2023-24 is 45.03 lakh crore which represents an increase by 14.14% over the BE 2022-23 and 7.54% over the RE 2022-23. Of this, the total effective Capital expenditure is 13.71 lakh crore (including 10.01 lakh crore on capital account and 3.70 lakh crore Grants in Aid for the creation of capital assets) which represents an increase of more than 30 per cent over RE 2022-23. Thus higher allocation under the Capital Outlays is on account of the Central Government's strong commitment to boost economic growth by investing more in infrastructure development particularly Railways and Roads and manufacturing sector. The corresponding total receipts are 27.16 lakh crore, comprising of of 26.32 lakh crore as Revenue Receipts from the tax and non-tax revenues and 0.84 lakh crore as Capital Receipts through recoveries of loans and other receipts, leaving a staggering gap of 17.87 lakh crore to be raised from the borrowings and other liabilities – representing the Fiscal Deficit of the government. The significant increase in revenue collection over the last year's estimates is mainly on account of the continuous increase in GST collection.

To learn the dynamics of the Union Budget from a layman's point of view, one may find it convenient and interesting to break the aforesaid expenditure and receipt up to one rupee level. In that context, every rupee receipt is comprised of Goods and Services Tax 17p, Income Tax 15p, Corporation Tax 15p, Union Excise duties 7p, Customs duties 4p, non-tax receipts 6p, non-debt Capital Receipts 2p, and borrowings and other liabilities 34p. On the other hand, every rupee expenditure is comprised of the Central Sector schemes (sans Capital Outlays on defence and subsidy)17p, Centrally Sponsored schemes 9p, Interest Payments 20p, Other Expenditure (revenue expenditure of all ministries and departments excluding defence) 8p, Defence 8p, Pension 4p, Subsidies 7p, States' share of taxes and duties 18p, and Finance Commission and other transfers 9p. Total receipts are inclusive of States' share of taxes and duties, and total expenditure too is inclusive of the States' share of taxes and duties, which are netted against the receipts. This position is understood more clearly from the pie charts for the Receipts and Expenditure Budget. (Source: MOF website)

While making sectoral allocation, the Finance Minister has taken care that none of the areas are unduly neglected or any imbalance is created. In some cases, increase over the last year's allocation or rather lower resource allocation is noticed but this is mainly because higher sectoral allocation made in the previous year was not fully utilized or there was no higher demand as such owing to the very nature of expenditure. However, certain sectors like the infrastructure segment comprising of Roads, Transport & Highways and Railways continue to remain a priority area with high allocation. For instance, the previous year's Budget allocation (BE 2022-23) for Roads & highways of over 1.99 lakh crore was itself an approximate 52% increase over the previous year's corresponding provision. In the BE 2023-24, this has been further augmented to over 2.70 lakh crore which represents an increase of 35.82% over the last year's Budget Estimates and 24.61% over the Revised Estimates, which inter alia suggest full utilization and good progress made during the current financial year. The National Highway Authority of India is the chief beneficiary of this augmentation for the improvement and construction of the highways and here the point need to be noted that infrastructure development is not only good for the sectoral growth in terms of employment generation and ease of living but also an essential requirement for the overall growth and development of the country and various sectors of the national economy.

The Railways have received constant push during the two regimes of the NDA government led by Mr Narendra Modi for the same aforesaid reason with continuous improvement, updradation  and augmentation of railway tracks, introduction of a large number of new comfortable and high speed passenger trains, and cargo terminals. The rapid progress in this segment could be fathomed from the fact that an all time high allocation of over 1.40 lakh crore was further augmented to 1.62 lakh crore in the Revised Estimates of the same year and a big jump to over 2.41 lakh crore has been made for the financial year 2023-24 that represents an increase of over 1.01 lakh crore in the real term and 72% in the percentage term. The Communication sector is yet another crucial area which has received constant priority of the federal government with an allocation of 1.23 lakh crore for the inclusive development and adoption of newer technologies besides sustaining the development already made so far. In this context, the remarkable point is that the sectoral allocation of  over 1.05 lakh crore on Communication made in the Budget Estimates last year itself represented an increase of 93% over the revised estimates of previous year which included the capital infusion in the Bharat Sanchar Nigam Limited (BSNL) and the 5G technology. Now this year's allocation indicates more than 17% under the Communication sector over the previous year.

Among the schemes of the social welfare and mass outreach, , Healthcare & Family Welfare and continue to be priority segments with adequate resource allocation. For instance, allocation for the Department of Pharmaceuticals alone with 3060 crore in BE 2023-24 represents more than 28% the revised allocation during the current year. Of this, an allocation of 1,250 crore is earmarked for the development of the Pharmaceutical industry, a phenomenal increase over just 100 crore during the previous year. Allocation under the Ayush Mantralaya for the Pradhanmantri Ayush Yojana is 3,648 crore, depicting more than 28% increase over the previous year. After 2019 general elections, the NDA government had undertaken an ambitious programme of covering all Indian villages for a piped water supply by 2030 and 70 thousand crore has been allocated for the Jal Jeevan Mission alone in the ensuing year. Similarly, a provision of over 20 thousand crore has been made for the River Development and Ganga Rejuvenation. The tribal population, particularly of the northeastern states, had been traditionally ignored by the successive previous governments. The development of the northeastern states had been undertaken at a large scale by the present government since 2014 to bring the tribal population in the national mainstream. Accordingly an allocation of 12,462 crore in BE 2023-24 represents an augmentation of 54.91% for the tribal affairs over the Revised Estimated 2022-23. (to be continued…)

(Courtesy: Boloji.com)

 

(The Author is a former civil servant and his core areas of specialization have been public administration, finance, information technology, human resource development, budget and planning, and legal matters)

Northlines
Northlines
The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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