New Delhi: The Union Budget, a focal point in Indian media coverage, ‘historically’ served as a platform for announcing economic development policies. In contrast, the current government has demonstrated a strategic and proactive approach, addressing urgent policy matters outside the traditional Budget day. This underscores its commitment to fiscal prudence, reinforcing expectations for the upcoming budget to prioritise lasting structural changes over short-term populism. In an election year, announcing popular policies invites criticism, often from the limited elected-opposition. Despite this challenging intellectual discourse, credit is due to the government for adeptly steering the economy amid the pandemic and its aftermath.
With the 18th Lok Sabha elections approaching, the Finance Minister will present an interim budget, subject to a vote on account. This restricts major initiatives with potential electoral benefits, as well as significant new expenditures, which become the responsibility of the next government. Consequently, the budget speech is anticipated to focus on routine expenditures, providing revenue estimates based on estimates or extrapolation. While the budget will be a Vote on Account, it will still present a balance sheet outlining plans to boost revenues through taxes and investments for growth. The Economic Survey of India, typically presented a day before the Union Budget, will serve as a key indicator during this period.
This time, there’s a unique twist. The Economic Survey will be released post-general elections and just a day before the full budget presentation. Instead of the traditional approach, “The Indian Economy: A Review,” a 74-page document authored by the Chief Economic Adviser and his team, has evolved into a “political PowerPoint”, a presentation detailing the government’s achievements over the last decade, with challenges ahead. The report projects the Indian economy to grow at over 7 per cent, aiming to become the world’s third-largest economy within three years, with a $5 trillion GDP. This aligns with estimates from the Reserve Bank of India.
The imperative for the upcoming financial year lies in attracting substantial private investments to ensure sustained growth over the next 24 years, aligning with the overarching objective of ‘Amrit Kaal.’ Let’s be clear; crunching numbers on a computer spreadsheet is a manageable task, but the real challenge is instigating significant private investments.
In an era of heightened global competition, nations are fiercely vying for supremacy across all economic dimensions. The vast international markets represent potential customers for every nation. Geopolitics will undoubtedly wield a profound influence in the years to come. Past achievements or setbacks should not dictate our future trajectory. The crucial question remains: Can the budget truly drive and stimulate private capital expenditures?
The Economic Review, unveiled this week, issues a cautionary note highlighting that the heightened growth and momentum in private investment were fueled by an unsustainable credit boom and mounting bad debt. Consequently, the investment share of GDP declined in the second decade but is gradually rebounding towards growth. Rejuvenating private investment in the economy remains a formidable challenge for the government. The predominant growth impetus has stemmed from public investments, a model that isn’t sustainable given the finite supply of government capital.
While the Indian economy stands relatively strong compared to global counterparts, it grapples with persistent challenges stemming from geopolitical complexities and adverse global economic conditions. Despite its resilience, there are ongoing issues, particularly evident in food inflation and rural sector growth. Heightened concerns about increasing rural unemployment demand careful consideration. The forthcoming Union Budget provides a crucial opportunity to address these persistent issues and lay the groundwork for sustainable and inclusive economic growth.
Despite a nation that prides itself on data governance and boasts a plethora of data sets and digital public infrastructure pipelines, we are yet to establish a singular data-led indicator for unemployment trends. The complexity arises from the absence of a clear consensus on what qualifies as reliable employment data. In 2018, the Labour Ministry discontinued the National Sample Survey Office’s Employment-Unemployment Surveys, typically conducted every five years, and introduced the Periodic Labour Force Survey (PLFS) in its stead. Merely using statistical tools to buttress any potential queries won’t augur well for long term policy development.
Despite the constraints of a vote-on-account, there is an anticipation of a positive government stance focused on nurturing economic consumption to uphold the upward trajectory of the “electoral economy.” This aligns with the government’s unwavering emphasis on growth strategies, evident in improvements in road connectivity, advancements in transportation infrastructure, and the prioritisation of localised manufacturing. These strategic focal points are poised to increase and might even see an increase in budgetary allocations.
Promoting the empowerment of women and increasing workforce participation can serve as catalysts for GDP growth. Tailored credit schemes that support women’s entrepreneurial ventures, along with policies fostering gender equality, have the potential to empower women to actively pursue entrepreneurial endeavours, especially within SMEs and MSMEs. Facilitating this requires enhanced access to finance for MSMEs, simplified tax slabs, and streamlined compliance processes. From an electoral perspective, these population segments contribute to a broader voter base. It becomes politically disadvantageous for any Opposition party to oppose proactive policies, budgetary allocations, or initiatives aimed at empowering women, promoting gender equality, supporting agriculture, or bolstering MSMEs.
India must channel investments into the softer aspects of infrastructure development, with a particular focus on education and healthcare. The nation has notably underinvested in healthcare, both in terms of physical infrastructure and skilled talent. Given projections that almost one-third of the Indian population may be susceptible to lifestyle diseases like diabetes and obesity in the next decade, amongst other diseases, urgent steps are needed, such as building more healthcare centers, particularly at the primary healthcare level. A healthier population is integral to strategic national security.
Furthermore, if India aspires to be a global leader in the AI and Web3 space, significant and increased funding for the education sector, particularly in research, is imperative. It’s worth contemplating why the education sector, despite allowing foreign direct investment (FDI) in all sectors (even in defence where national security issues are concerned), remains excessively regulated. If education sector cannot build Intellectual Property that the world pays to use, what’s the point of churning degrees when it’s recipients can’t get livelihood access ?
India must infuse aspects of “quality” into all endeavours. Mere numerical or quantified growth is insufficient for lasting impact. To truly succeed, India needs to foster a culture of excellence and innovation across various sectors. That’s what I would want for the next generation.
(Dr Sridharan is a Policy Researcher and Corporate advisor. Follow his tweets on @ssmumbai)
(Disclaimer: The views expressed in this article are those of the author alone. The opinions and facts in this article do not represent the stand of News9.)
Budget 2024: Will it budge or ballast?
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31.01.2024
New Delhi: The Union Budget, a focal point in Indian media coverage, ‘historically’ served as a platform for announcing economic development policies. In contrast, the current government has demonstrated a strategic and proactive approach, addressing urgent policy matters outside the traditional Budget day. This underscores its commitment to fiscal prudence, reinforcing expectations for the upcoming budget to prioritise lasting structural changes over short-term populism. In an election year, announcing popular policies invites criticism, often from the limited elected-opposition. Despite this challenging intellectual discourse, credit is due to the government for adeptly steering the economy amid the pandemic and its aftermath.
With the 18th Lok Sabha elections approaching, the Finance Minister will present an interim budget, subject to a vote on account. This restricts major initiatives with potential electoral benefits, as well as significant new expenditures, which become the responsibility of the next government. Consequently, the budget speech is anticipated to focus on routine expenditures, providing revenue estimates based on estimates or extrapolation. While the budget will be a Vote on Account, it will still present a balance sheet outlining plans to boost revenues through taxes and investments for growth. The Economic Survey of India, typically presented a day before the Union Budget, will serve as a key indicator during this period.
This time, there’s a unique twist. The Economic Survey will be released post-general elections and just a day before the full budget presentation. Instead of the traditional approach, “The Indian Economy: A Review,” a 74-page document authored by the Chief Economic Adviser and his team, has evolved into a “political PowerPoint”, a presentation detailing the government’s achievements over the last decade, with challenges ahead. The report projects the Indian economy........
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