Analysis
by Dr. Jaipal Singh
- Budget as An Engine of
Inclusive Growth
During her Budget presentation speech, the Finance Minister made a significant announcement that this was the first Budget of the “Amrit Kaal” and their government's vision for the Amrit Kaal included a technology-driven and knowledge-based economy with strong public finances and a robust financial sector. She added that to achieve this vision the ‘jan-bhaagidari' (public participation) through ‘sabka saath, sabka prayas' (combined efforts by all) was essential. The term Amrit Kaal was coined and first used by Prime Minister Narendra Modi in 2021 in the context of 75th Independence Day celebration while delivering his speech from the ramparts of the Red Fort in Delhi. A constant dreamer he is; he said that the goal of Amrit Kaal was to ascend to new heights of prosperity for India and the citizens of India. He further expanded this period to a roadmap of the next twenty-five years during which the country must endeavour to work towards improving the lives of its citizens, reduce the divide between the cities and villages, minimize the government interference in people's lives and build modern infrastructure in India.
The term ‘Amrit Kaal' is said to have been derived from the Vedic astrology equating it to a sort of golden era. While growth in four core areas of priorities adopted during previous year's Budget viz. the PM GatiShakti, Inclusive Development, Productivity Enhancement & Investment, and Financing of Investments continue hitherto fore, as highlighted through the first Budget of Amrit Kaal, its core vision includes three-objectives namely opportunities for citizens with focus on youth; growth and job creation; and strong and stable macro-economic environment. In her long-drawn Budget speech, the Finance Minister painstakingly explained four opportunities and Satarishi-7 priorities to achieve the intended vision. Briefly, the four transformative opportunities include: 1) Economic Empowerment of Women; 2) Prime Minister Vishwakarma Kaushal Samman aka PM VIKAS targeting the traditional artisans and craftsmen; 3) Tourism – developing and making best use of the country's immense tourism potential; and 4) Green Growth i.e. implementing various programmes for green fuel, green energy, green farming, green mobility, green buildings, green equipment, and so on, and making policies for efficient use of energy across various economic sectors.
The Budget documents for the ensuing year has highlighted the following seven priorities to remain as guiding force throughout the Amrit Kaal, being complementary to each other, and were dealt with at length by the Finance Minister during the Budget presentation. These priorities under the nomenclature of Saptarishi-7 are briefly as follows: 1) Inclusive Development, 2) Reaching the Last Mile, 3) Infrastructure and Investment, 4) Unleashing the Potential, 5) Green Growth, 6) Youth Power, and 7) Financial Sector. Inclusive development is broadly reflected in the Government's ideology of Sabka Saath Sabka Vikas that addresses inclusive development of farmers, women, youth, OBCs, Scheduled Castes, Scheduled Tribes, divyangjan (disabled) and economically weaker sections, and overall priority for the underprivileged. Similarly, under the same philosophy, sustained focus is also extended to the people of the states and union territories of Jammu & Kashmir, Ladakh and the North-East.
It's obvious that numerous schemes, resource mobilization and allocation under all the aforesaid seven priorities can neither be explained nor accommodated within the scope of this essay; hence only a few items are cited here for illustration. The multi-discipline inclusive development inter alia caters for agriculture, horticulture, fisheries, health, education, skilling, medical and pharma services, and so on, with a provision of increased credit upto 20 lakh crore with special focus on animal husbandry, dairy and fisheries. Inclusive development is not a new concept and, in fact, the present government has already been working on it leading to over 47.8 crore Jan Dhan bank accounts, 11.7 crore household toilets under the Swachh Bharat Mission, 9.6 crore LPG connections under the Ujjawala scheme, 220 crore Covid vaccination of about 102 crore persons, insurance cover for 44.6 crore persons under the Suraksha Bima and the Jeevan Jyoti Yojana, cash transfer of 2.2 lakh crore to over 11.4 crore farmers under Kisan Samman Nidhi so far during the last few years. The ministries of Ayush, Fisheries, Animal Husbandry and Dairying, Skill Development, Jal Shakti and Cooperation were in fact created in recent years keeping in view to reaching the last mile priority which among other things also includes the PM Awas Yojana with outlays of over 79,000 crore. Two other development programmes are aimed at particularly vulnerable tribal groups (PVTG) with planned investment of 15 thousand crore in next three years and creation of urban infrastructure in the Tier 2 and 3 cities.
The Government focus on the development of infrastructure and investment potential needs no emphasis owing to its large multiplier impact on growth and employment and any aware person can learn it from massive increase in sectoral allocation and progress achieved during the last few years. Under the priority ‘Unleashing of Potential, several programmes have already been launched or proposed to be launched through the current budget, These inter alia include programmes like Mission Karmayogi, Centres of Excellence for Artificial Intelligence, National Data Governance Policy, Simplification of Know Your Customer (KYC) process, One stop solution for identity and address updating, Common Business Identifier for ease of doing business, Unified Filing Process to obviate submission of repeated personal data and information, Vivad Se Viswas for relief to MSMEs and settlement of contractual disputes, E-courts, Result Based Financing, to name a few.
Under the Green Growth, a vision for life as environmentally conscious lifestyle has been conceptualized and several schemes and programmes including Green Hydrogen Mission, Energy Transition, Energy Storage Projects, Renewable Energy Evacuation, Green Credit, PM-Pranam, Govardhan, MISHTI, Amrit Dharaohar for the restoration of Wetlands vital to ecosystems sustaining biological diversity, and so on, are either already launched or envisaged in the ensuing year with commensurate resource allocation. For instance, the recently launched National Green Hydrogen Mission, with an outlay of 19,700 crore, is aimed at facilitating transition of the economy to a low carbon intensity, reduce dependence on fossil fuel imports, and make the country to assume technology and market leadership in this sunrise sector. Similarly, the Budget caters for 35,000 crore on account of priority capital investments towards energy transition, net zero objective and energy security. Under Renewable Energy Evacuation, the Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh is planned with an investment of 20,700 crore including the Central support of 8,300 crore.
In the context of a crucial priority to Youth Power, nicknamed Amrit Peedhi, earlier a National Education Policy was already formulated with the focus on skilling and economic policies which would facilitate job creation commensurate to modern age at ample scale with enough business opportunities. This inter alia includes Pradhan Mantri Kaushal Vikas Yojana 4.0 covering courses for Industry such as coding, Artificial Intelligence, robotics, mechatronics, 3D printing, drones, etc., Skill India Digital Platform for skilling of youth in different trades and National Apprenticeship Promotion Scheme to provide stipend support to 47 lakh youth in three years. Tourism and Unity Mall are other area where the government intends to focus for the sustained development. The Financial Sector priority includes a slew of measures like Credit Guarantee for MSMEs, National Financial Information Registry, Financial Sector Regulations, Improving Governance and Investor Protection in Banking Sector, Capacity Building in Securities Market, Central Data Processing Centre, Digital Payments, Fiscal Management, and so on.
This analysis will remain incomplete if two important expenditure areas namely Defence and Subsidies are not mentioned. While the Defence of the country has received maximum attention under the NDA government led by Mr Modi but the Government has not been very favourably inclined towards subsidies. However, certain compulsions including the prevailing economic situation due to Covid-19 pandemic and political environment in the country whereunder almost all opposition parties overly emphasize and resort to freebies and liberal subsidies culture for their survival and empowerment, have forced this government to continue subsidies in certain sectors. A major chunk of the subsidy allocation has gone as the food subsidy with more than 1.97 lakh crore in 2023-24 for the poor and less privileged which, however, represents a reduction by 31% from the
Revised Estimate of over 2.87 lakh crore for 2022-23. Fertilizers is yet another crucial area where the government has earmarked over 1.75 lakh crore in 2023-24, a 22% drop from the Revised Estimate of more than 2.25 lakh crore for 2022-23. Then the Fuel subsidies have been budgeted at 2,257 crore, representing a reduction of nearly 75% from the current year's Revised Estimates of 9,171 crore. The flip side of the food subsidy is that the discontinuance of free food grain disbursements under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) shall lead to a drop in the ensuing year but extension of the same under the National Food Security Act for yet another year would increase the liability say by at least 2.0 lakh crore more.
As for the Defence, this is an area which had been constantly ignored and given low priority by the successive Congress or Congress led governments. The usual and strange logic given for this approach was inadequate resources and avoidance of arms race in the sub-continent, particularly keeping in view potentially strong and powerful People's Republic of China (PRC) as neighbour. With two potential adversaries and their continued hostilities on the borders, the Defence of country has received high priority during the last two successive governments with Mr Narendra Modi as prime minister. Accordingly, an allocation of 5.96 lakh crore have been made for 2023-24, which represents 13.52% increase over the previous year's 5.25 lakh crore. Of this, 1.62 lakh crore is earmarked for the capital spending on procurement of weapons and equipment, aircraft, warship and other military hardware. A capital outlay of about 5,000 crore has been separately provided for the border roads and associated infrastructure during the year. Such allocations are in accordance with the current zero-tolerance policy of India towards violations on border incurred by China and Pakistan and, thereby, the express need for creating the border infrastructure and adopting commensurate modern technology for the armed forces.
It is a settled principle that for incurring the budgetary expenditure on various programmes and activities, the commensurate revenue mobilization is also essential. Keeping in view the limitations of this write-up, the author is not going into the nitty-gritty of the taxation, borrowings and other miscellaneous revenue sources. In a nutshell, however, probably keeping the next General Elections in view, the Government has avoided any major changes in the existing direct tax regime, except for giving relief to income tax payers, more rationalization and simplification in certain areas and fine-tuning of rates here and there. Under the indirect taxes, the remarkable progress under the Goods and Services Tax (GST) revenues has continued hitherto fore, which achieved constantly improved quarterly collection in recent past and in the ensuing year tax collection from GST has been estimated at 17% of the total receipt budget. Customs duty on several items has been revised; on certain items such as gold, platinum and aeroplanes, the amount of cess has been increased with the corresponding decrease in customs duties. As against the expenditure budget of 45.03 lakh crore in BE 2023-24, the receipts other than the borrowings are estimated at 27.16 lakh crore leaving a staggering gap of 17.87 lakh crore as fiscal deficit, which works out to 5.9% of the GDP. (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)
