Nimrala Sitharaman ended her maiden innings as India’s first full-time woman Finance Minister on a high note, with her sixth and last budget speech to the 17th Lok Sabha winning plaudits on several counts, and yielding some talking points.
Palpably confident, as if to say ‘all is well’, the FM met expectations of a continued focus on infrastructure and fiscal consolidation, with no populist measures ahead of the general elections. While eschewing freebies in the vote-on-account and keeping tax rates unchanged, she reached out to women, youth and the middle-class.
The big announcements to women
‘Lakhpati didi’, a reference to Self-Help Groups in which members earn an income of one lakh a year, could well become a catchphrase ahead of the polls, with Sitharaman announcing that the target would be increased from two to three crore beneficiaries. Other big announcements for women include bringing anganwadi and ASHA workers under the Ayushman umbrella, improved health infrastructure, an immunisation drive against HPV and expanding the Awas Yojana to build another two crore rural homes. For the middle class, junking of decades-old income tax demands is welcome, as is the prospect of a new scheme facilitating housing.
Sitharaman also cocked a snook at the Opposition’s ‘revdi’ strategy by pointing out that the rooftop solar scheme (PM Suryodaya Yojana) would allow some one crore beneficiaries to get 300 units of free electricity while selling the surplus to the utility — a veiled criticism of the Aam Aadmi Party’s freebies.
FM’s budget speeches
The FM’s budget speeches tend to have at least one mention of cutting-edge technology, be it quantum computing, drones or AI. This year’s standout proposal was that of a Rs 1 lakh crore fund for financing tech research, with 50 years of interest free loans, aimed at boosting private sector research and innovation. She also promised a scheme for deep-tech innovation in the defence sector.
All in all, Sitharaman has proved that she is woman enough to fill the post occupied by such luminaries as Dr Manmohan Singh, P Chidambaram and the late Pranab Mukherjee. No FM has faced the plethora of challenges that she has and negotiated them with aplomb.
Sitharaman's tenure and major steps taken
When Sitharaman took over in 2019, real GDP growth was around 4 per cent. For 2023-24, it is estimated at 7.3 per cent. At the time, the NDA government was facing criticism for apparent economic missteps, the first being demonetisation — the scrapping of some 86 per cent of the currency in circulation. Besides, the shadow of a banking crisis loomed, with fears that it would impact the rest of the country’s financial sector. Also, there was the question of funding massive welfare programmes.
Critics were quick to point to her less-than-successful stint as Commerce minister, marked by falling exports and no headway in concluding free trade agreements. It was assumed that she would be a figurehead, with the PMO handling her portfolio.
Sitharaman confounded her critics by steering the economy through three major disruptions — the first Covid shock of early 2020, followed by delta wave of 2021 and the Russia-Ukraine war. During the pandemic, she showed nerves of steel, resisting demands for major cash drops along the lines of the US and Europe.
She chose to focus on the vulnerable, with DBT and free foodgrains for the poor, and emergency credit for MSMEs. The bulk of the first package was spent on the poor, and the second on credit to MSMEs and farmers. Responding to the disruption in global supply chains, the Atmanirbhar Bharat scheme offered Production Linked Incentive (PLI) schemes across 14 sectors, including pharma, electronics hardware, telecom, automobiles and drones, plus tax breaks.
The success of PLI had already been established by a boom in electronics exports. Following the global shortage, the National Semiconductor Mission, with an outlay of Rs 76,000, was launched.
Sitharaman’s list of achievements
High on Sitharaman’s list of achievements is the massive boost in central government capex on infrastructure, from 1.6 per cent of the GDP in 2018-19 to an estimated 3.4 per cent in 2023-24. The National Infrastructure Pipeline has some 70 lakh crore worth of projects under implementation, while the Gati Shakti mission and economic corridors are aimed at improving logistics.
In 2019, right off the bat, she lowered corporate tax rates (unfortunately, Covid hit the following year). And in 2021, she repealed the retrospective taxation law of 2012. To ease pressure on taxpayers, new direct tax slabs were introduced and the exemption limit hiked, effectively ensuring zero taxes on income up to Rs 7 lakh per annum. For tax disputes, faceless assessment was rolled out in 2023.
She has also been lauded for maintaining fiscal discipline. The fiscal deficit for the current year is estimated at 5.8 per cent, while the target for 2024-25 is 5.1 per cent of GDP and for the year after, 4.5 per cent.
Sitharaman is, after all, a politician and did not miss the opportunity to broadcast her government’s achievements, be it a passing reference to the Ram Mandir, India’s success in sports, the banning of triple talaq or the India-Middle East-Europe corridor. Not to mention the promised white paper comparing the ‘mismanagement’ of previous governments with the good governance of the NDA.
Will Sitharaman present a full budget in July? Rumour has it that she may contest the Lok Sabha from Tamil Nadu. Win or lose, if the NDA is back, chances are that she will.
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