Interim Budget 2024 presented by the Finance Minister, Nirmala Sitharaman has been termed as the balanced and calm one by the analysts. Underlining that this is a confident budget that speaks about the conviction of the Modi Government. As the incumbent government is on a strong wicket and is going to fight the Parliamentary Elections of 2024 on safe political turf. The tone and tenor is this budget makes it clear that the Modi regime will give definitive budget once it enters the Parliament with a thumping majority. Its indication can be felt in terms of no welfare schemes or income tax concessions for the beneficiaries. When we compare it with the interim budget of 2019-2020, the difference can be felt. Pradhan Mantri Kisan Samman Nidhi programme was launched at that time. It catered to all farm households. This interim budget has not witnessed any increase of limit under this scheme. It can be called a vote on scheme exercise meant to seek Parliament’s ascent for the routine business till the full-fledged budget is passed .There is no inkling of the populist measures in this stop gap budget. This can be accredited to the pretty safe political climate evident for the Team Modi. This budget is an effort for the fiscal consolidation. As the gross fiscal deficit has fallen below the budget target and this is coming from a cut in the revenue deficit. Centre’s capital expenditure that had risen by 28.4 % in 2023 -2024 is supposed to grow by 16.9 % in 2024-2025.This fiscal consolidation in terms of quality and quantity is indeed encouraging for the financial health of the nation. This means moving away from subsidies and current outlays towards assets creating capital expenditure. It signals that the trajectory of the Indian economy is taking a path of growth and making the government to borrow less. It also signals that the driver of growth will be stimulated by the private sector. There is a greater scope for the corporates to invest in this new national economic climate. Thus making a significant diversion from the traditional economic path .Both in terms of macroeconomic and microeconomic stability there is much to cheer about. Finance Minister has given an ample indication that the government wants the private investors and the corporate sector to play the lead role by using its complete potential to keep the Indian markets buoyant .As there will be no sustained job creation in its absence. Consequently it will have an adverse impact on consumption. She explained that with the metaphor of Hanuman in the Ramayana. Who had to be reminded of his extraordinary powers. So that he can surpass the obstacles. Here the Hanuman is the India Inc. Start-ups have been the worst affected post pandemic .As such to put the start-ups on the track of economic viability a full-fledged budget has to be presented by the new government and address this issue. As India needs to utilise its demographic dividend to create a robust economy. Besides that. One area that has been unaddressed is the middle class. As there is no tax relief. This is when the taxes (direct and indirect taken together) constitute as much as 63% of the gross annual receipts. What the Government of India (GOI) is quoting in support of the Budget being growth and development oriented while at the same time ensuring social welfare is:
(a) A huge and increase in the Capex thus ensuing consistency on this count.
Well if all Capex Allocations in any budget (by this government or any other) actually translated into implication, it would actually benefit the nation hugely. That is because it means asset creation which then generates income. Besides, during the time it takes for creation of a capital asset, there is business generation for a host of industries involved eg. Iron, Steel, Cement etc. to name a few. Simultaneously it leads to job creation (for both skilled and unskilled work force). This is however, where the catch is.
There is always a huge gap between allocation and actual implementation.
(b) Allocations for skill development, MSME development, fisheries and what not.
Here again there is a continuing gap between allocation and implementation
Therefore as is true of all budgetary allocations not based on proper assessment of the ground situation, there is an over commitment of available resources towards identified purposes. This in turn means that the funds so allocated get frozen for the committed purposes and hence cannot be put to any other use even if they remain un utilised.
(c) The government quoted increased allocation towards Kissan Samman Nidhi , Ayush Bharat etc.
Well Ayush Bharat is a highly essential Social Welfare measure which benefits a huge chunk of population. Therefore it is justified provided the allocation keeps pace with implementation. Kissan Saman Nidhi while touted as a social welfare measure is basically a vote catcher in the garb of being a relief provided to the farmers. And then, these are purely revenue expenditures, i.e. expenditures which though essential, do not lead to any economic development (though that these and other such social welfare expenditures are unavoidable). The GOI would have done well to make a realistic assessment of the situation and cut down on overcommitted fund allocations till the earlier allocations stood substantially utilised . The released funds could be allowed to provide relief to the tax paying middle class by demanding less from them in the future, by way of taxes. This would mean a reward of sorts for being the major contributor to the running and development of the nation. Here we should also keep in mind that borrowings to finance the fiscal deficit are only 20% as against the 63% coming from taxes, which again merited some relief to the tax payers being given. Unfortunately, that is something which has not happened yet again for the individual tax payers though the government has been kind to the corporate sector in some measure by giving it tax relief .This is injustice to the ever suffering tax paying middle class, to say the least. Hope these issues are addressed in the full-fledged budget by the new government after the Parliamentary Elections
