Arvind Gupta
The critiques might say it is sedative for the people till the next general elections, and label it a pre-election budget. But mind it budget making is a complex task and interpreting the same is more hazardous given the amount of fine print that one has to pore over. It is the first Budget of Amrit Kaal and the blueprint for India @100.
Finance Minister Nirmala Sitharaman is the sixth minister in independent India to present five consecutive budget, joining a select league of legends likes of Manmohan Singh, Arun Jaitley and P Chidambaram. Sitharaman’s budget for the fiscal year starting April 2023 is her fifth straight since 2019. Other ministers who have presented five straight annual financial statements include Arun Jaitley, P Chidambaram, Yashwant Sinha, Manmohan Singh and Morarji Desai.
Union minister Nirmala Sitharaman chose a bright red saree with a black border for her 5th Budget on Wednesday. The finance minister’s love for handloom saree is nothing new, but her choice of attire on the Budget day always remains a subject of interest for experts looking for any hint about the overall mood of the budget from the colour she chooses to wear.
This first Budget in Amrit Kaal includes overall development that ensures prosperity for all, especially the youth, women, farmers, Other Backward Classes, Scheduled Castes and Scheduled Tribes, a focus on infrastructure and investment that serves as a multiplier for growth and employment, policies to enable green or environmentally sustainable growth, the rationalisation of direct taxes, including a raft of concessions to the middle and salaried classes, and pensioners. The Budget speech of Finance Minister started in the backdrop of the achievements since 2014, when Prime Minister Narendra Modi first assumed office. Per capita income, she said, had more than doubled to ?1.97 lakh as a result of the economy’s growth to being the world’s fifth-largest and the government’s efforts to ensure a better quality of living for all. She also cited an increase in formalisation of the economy and the widespread adoption of digital technologies, especially in the payments sphere, as other significant achievements.
With an eye on ‘India at 100’, the Budget proposals, Ms. Sitharaman said, were aimed at actualising a “technology-driven and knowledge-based economy with strong public finances, and a robust financial sector”. PM VIKAS or Pradhan Mantri Vishwakarma Kaushal Samman, for instance, would for the first time offer traditional artisans and craftspeople, or Vishwakarmas, a package of assistance aimed at helping them improve the quality, scale and reach of their products, she said. Similarly, a ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’ or ‘MISHTI’, aimed at undertaking mangrove plantation along the coastline and on salt pan lands leaves the funding to a “convergence between MGNREGS and a compensatory afforestation fund”. With the rural sector’s mainstay employment guarantee scheme, one that was introduced during the Congress-led United Progressive Alliance government’s term, itself increasingly being starved of budgetary support, it is hard to fathom how the new initiative to protect and regenerate the ecologically sensitive mangroves will be funded. The decrease in outlay comes at a time when the rural economy is still to regain vigour from the ravages of the pandemic, the fallout on incomes from the uneven distribution of last year’s monsoon rainfall, and the relatively greater impact of high food inflation on hinterland households.
FM’s seven ‘Saptarishi’ mantras
Among the key takeaways includes Budget estimate for expenditure on rural development in 2023-24 is pegged at ?2.38 lakh crore, a marginal 0.1 percentage point increase when measured as a proportion of overall expenditure at 5.3%, compared with the 5.2% in the previous Budget Estimate. Food subsidy too has been sharply pared: at ?1.97 lakh crore, it is almost 5% lower than the 2022-23 To be sure, the government’s resolve to stay the course on fiscal consolidation, especially after the COVID-19 pandemic had led it to spend more even as revenue receipts dipped amid the unprecedented economic contraction. Capital expenditure has been allocated ?10 lakh crore, a 33% jump from this fiscal’s Budget estimate. If one adds the almost ?3.7 lakh crore set aside for grants-in-aid to States for the creation of capital assets, the Minister’s laudable intent to apply the force multiplier of government capital spending as the primary lever to spur economic activity becomes clearly evident. With global demand uncertain this year on account of the slowdown in the developed economies, as the Economic Survey pertinently pointed out, India’s domestic market will necessarily have to serve as the economy’s bulwark. Ms. Sitharaman has also attempted to woo the middle class with a raft of changes in personal income tax that would, in combination with tweaks to customs duties, in total cost the government ? 37,000 crore in foregone direct tax revenue. Some of these changes are aimed at leaving more money in the hands of the salaried and pensioners, cash that the Budget planners hope would find its way back either as savings or increased spending on vital consumption. The biggest beneficiaries of the income-tax changes though are likely to be those in the highest income bracket, where the effective rate has been cut by 3.74 percentage points reinforcing a perception that this government bats for the affluent.
Five big things one can’t miss
* FM announced an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh stating that the new tax regime will now be the default tax regime. She also proposed to change the tax structure in this regime by reducing the number of tax slabs to 5 and increasing the tax exemption limit to Rs 3 lakh.
* FM proposed to raise the capital expenditure target by 33% to Rs. 10 lakh crore for the next fiscal year starting April 1, which is 3.3% of the country’s economic output.
* Finance Minister Nirmala Sitharaman provided an outlay of Rs 35,000 crore to achieve energy transition and net zero objectives and listed green growth among seven priorities of the government.
* Government said that a capital outlay of Rs 2.4 lakh crore has been provided for railways, which is highest-ever allocation since 2013-14. Finance minister Nirmala Sitharaman said that the capital outlay was fixed for 2023-24.
* Government will target a budget deficit of 5.9% of GDP for 2023/24, compared to 6.4% for the current fiscal year.
Commenting on the Budget, Prime Minister Narendra Modi said “…India’s budget will not only fulfil the hopes and dreams of the common man of India, but the ray of hope which the world is seeing should be seen more brightly…”
(The author is State Secretary & Prabhari District Reasi, BJP Jammu & Kashmir UT)
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