The interim Budget 2024-25 is being announced at a time when India is widely believed to have emerged as the economy of promise in a vulnerable world. This is evident from the robust growth rate of 7.3% projected for FY24. The country has achieved both growth and economic stability through exceptional macroeconomic management despite unprecedented global challenges. In such a scenario, the Budget should continue to strengthen the building blocks of the economy and attain the long-term objective of sustainable and inclusive growth.
At the current juncture, the finance minister is faced with the daunting task of providing an impetus to growth and stimulating demand. Equally important is to retain the focus on redistributive strategies which would benefit youth, farmers, women, the poor and tribals while ensuring that the fiscal deficit remains within targets.
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First, a major focus of the Budget should be on rejuvenating agriculture and rural demand while ensuring farmers’ progress and increasing farmers’ incomes. Today, the farmer is facing multifarious challenges, including low productivity and falling yield, vulnerability to climate change, uncertain monsoons, etc.
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Poor lessons: Through its dodgy accounting, Byju’s has queered the pitch for India’s start-ups The FM may consider increasing the allocation to PM-Kisan Samman Nidhi as well as PM Fasal Bima Yojana. Such a move would improve the purchasing power in rural areas and incentivise private investments. Adequate support should be provided to the rural economy by increasing the fund allocation on rural-focused schemes such as the Pradhan Mantri Gram Sadak Yojna (PMGSY) and the Pradhan Mantri Awas Yojana-Gramin (PMAY-G), which would help to facilitate quick execution of rural infrastructure projects. Projects with smaller gestation periods should be considered for quick relief. The Budget should also raise allocations for areas such as cold supply chains for perishables, expanding the irrigation network, and ensuring water security for water stressed districts, among others.
The Budget speech should stress that the allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) can be enhanced, if required, to support livelihoods in case of monsoon failure, etc.
Second, skill development and promoting quality education is critical to improve employability and enhance job creation. The budget allocation for education needs to be enhanced to at least 6% of GDP and a clear timeline for this process, along with an initial substantive push, could be part of the budget announcements. With a focus on early childhood education, reduction in the drop-out rates in middle and high schools, upgrading the learning environment at schools, and training of teachers, a higher allocation would go a long way towards improving the state of education in the country.
For skill development, a gap study of the Indian workforce should be initiated for different sectors internationally which are facing or are likely to face labour shortages in the near future. Based on results of such a study, targeted skill upgradation schemes should be initiated. For countries with a large-scale labour requirement, such training should also include the language and cultural sensitisation.
Third, the per capita expenditure on healthcare has been significantly below international averages and this Budget should seek to make a decisive change. There should be a rise in allocations for schemes such as Ayushman Bharat, which would provide health insurance coverage to the poor and the vulnerable. The coverage could also extend to those just above the poverty line. Further, it should provide incentives for scaling up of healthcare PPP. A target should be set of bringing 200 existing government district and sub-district hospitals under PPP for improving the service offering, infrastructure, and capacity. The National Bank for Financing Infrastructure and Development (NaBFID) should help in developing new models of PPP in healthcare as part of its development mandate.
Fourth, women-led development which would grant women a leadership role in economic decision-making should be the key pillar of the Budget. The focus should be to promote female entrepreneurship in the country for which the funding limit of credit schemes targeting women entrepreneurs like the MUDRA, Stand-up India, and other credit guarantee schemes should be expanded.
While raising allocations for the social sector, the government should not deviate from the path of fiscal consolidation. The budget should meet the fiscal deficit target of 5.9% during FY24. For FY25, it can be further reduced to around 5.2% without losing the focus on growth with inclusion. Achieving this requires specific measures to augment revenue and rationalise unproductive expenditures.
For revenue augmentation, simplification and rationalisation of taxes should continue; the next set of GST reforms should be signalled, giving it a three-rate structure and subsuming petroleum, electricity, and real estate. This should be accompanied by an aggressive focus on meeting the disinvestment targets by bringing in an element of demand-side considerations and creating a three-year schedule for disinvestment.
On the expenditure side, the food and fertiliser subsidies, which constitute the bulk of subsidies, should be rationalised without impacting the deserving beneficiaries by better targeting and more efficient utilisation.
The Indian industry welcomes the positive reform measures and innovative campaigns instituted by the government recently. It anticipates another progressive and impactful interim Budget.
Chandrajit Banerjee, Director-general, CII. Views are personal.
The interim Budget 2024-25 is being announced at a time when India is widely believed to have emerged as the economy of promise in a vulnerable world. This is evident from the robust growth rate of 7.3% projected for FY24. The country has achieved both growth and economic stability through exceptional macroeconomic management despite unprecedented global challenges. In such a scenario, the Budget should continue to strengthen the building blocks of the economy and attain the long-term objective of sustainable and inclusive growth.
At the current juncture, the finance minister is faced with the daunting task of providing an impetus to growth and stimulating demand. Equally important is to retain the focus on redistributive strategies which would benefit youth, farmers, women, the poor and tribals while ensuring that the fiscal deficit remains within targets.
First, a major focus of the Budget should be on rejuvenating agriculture and rural demand while ensuring farmers’ progress and increasing farmers’ incomes. Today, the farmer is facing multifarious challenges, including low productivity and falling yield, vulnerability to climate change, uncertain monsoons, etc.
The FM may consider increasing the allocation to PM-Kisan Samman Nidhi as well as PM Fasal Bima Yojana. Such a move would improve the purchasing power in rural areas and incentivise private investments. Adequate support should be provided to the rural economy by increasing the fund allocation on rural-focused schemes such as the Pradhan Mantri Gram Sadak Yojna (PMGSY) and the Pradhan Mantri Awas Yojana-Gramin (PMAY-G), which would help to facilitate quick execution of rural infrastructure projects. Projects with smaller gestation periods should be considered for quick relief. The Budget should also raise allocations for areas such as cold supply chains for perishables, expanding the irrigation network, and ensuring water security for water stressed districts, among others.
The Budget speech should stress that the allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) can be enhanced, if required, to support livelihoods in case of monsoon failure, etc.
Second, skill development and promoting quality education is critical to improve employability and enhance job creation. The budget allocation for education needs to be enhanced to at least 6% of GDP and a clear timeline for this process, along with an initial substantive push, could be part of the budget announcements. With a focus on early childhood education, reduction in the drop-out rates in middle and high schools, upgrading the learning environment at schools, and training of teachers, a higher allocation would go a long way towards improving the state of education in the country.
For skill development, a gap study of the Indian workforce should be initiated for different sectors internationally which are facing or are likely to face labour shortages in the near future. Based on results of such a study, targeted skill upgradation schemes should be initiated. For countries with a large-scale labour requirement, such training should also include the language and cultural sensitisation.
Third, the per capita expenditure on healthcare has been significantly below international averages and this Budget should seek to make a decisive change. There should be a rise in allocations for schemes such as Ayushman Bharat, which would provide health insurance coverage to the poor and the vulnerable. The coverage could also extend to those just above the poverty line. Further, it should provide incentives for scaling up of healthcare PPP. A target should be set of bringing 200 existing government district and sub-district hospitals under PPP for improving the service offering, infrastructure, and capacity. The National Bank for Financing Infrastructure and Development (NaBFID) should help in developing new models of PPP in healthcare as part of its development mandate.
Fourth, women-led development which would grant women a leadership role in economic decision-making should be the key pillar of the Budget. The focus should be to promote female entrepreneurship in the country for which the funding limit of credit schemes targeting women entrepreneurs like the MUDRA, Stand-up India, and other credit guarantee schemes should be expanded.
While raising allocations for the social sector, the government should not deviate from the path of fiscal consolidation. The budget should meet the fiscal deficit target of 5.9% during FY24. For FY25, it can be further reduced to around 5.2% without losing the focus on growth with inclusion. Achieving this requires specific measures to augment revenue and rationalise unproductive expenditures.
For revenue augmentation, simplification and rationalisation of taxes should continue; the next set of GST reforms should be signalled, giving it a three-rate structure and subsuming petroleum, electricity, and real estate. This should be accompanied by an aggressive focus on meeting the disinvestment targets by bringing in an element of demand-side considerations and creating a three-year schedule for disinvestment.
On the expenditure side, the food and fertiliser subsidies, which constitute the bulk of subsidies, should be rationalised without impacting the deserving beneficiaries by better targeting and more efficient utilisation.
The Indian industry welcomes the positive reform measures and innovative campaigns instituted by the government recently. It anticipates another progressive and impactful interim Budget.
Chandrajit Banerjee, Director-general, CII. Views are personal.
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