Economic Highlights
New Delhi, 3 February
2024
FM Promises Golden Era
HI DEBT FUNDS Rs 47tr BUDGET
By Shivaji Sarkar
It is a sparkling poll budget right from the President’s address
of Draupadi Murmu harping on the economy, to Finance Minister Nirmala
Sitharaman harping on the need to give hope to the people, attract investments,
highest capital expenditure, focus on rural recovery with housing, post-harvest
activities unveiling series of programmes for farmers, women, middle class and
dream GDP growth of 7.3 per cent.
The election emphasis was sharper in the President’s speech
as she unfolded the narrative of space to the economy and the finance minister
announced bringing a White Paper on mismanagement of the economy till 2014,
which marks an era of one of the five fragile economies led by Congress-led
UPA. It may also illustrate how it is becoming one of the top five economies.
The President in her ceremonial address to the joint
session of Parliament in the new building presented the government’s
achievements over 10 years across a variety of areas, offering a glimpse into
the issues the BJP-led NDA might focus ahead of the 2024 elections. “Since
childhood we have been hearing the slogan of “Garibi Hatao” (Indira
Gandhi’s plank in 1971), now for the first time in our lives, we are witnessing
eradication of poverty on a massive scale” adding that the poor people, youth,
women, and farmers would be the four ‘strong pillars’ of Viksit Bharat.
Repeating the “four pillars”, Sitharaman stressed on the various
programmes on the path to progress and growth. She repeatedly harped on all
kinds of farming classes – farmers, fishermen and dairy developers, the potential
voters.
The interim budget is not without its focus to impress. It
has large figures such as Rs 47.65 lakh crore expenditure (about Rs 3 lakh
crore more than 2023-4), Rs 30.8 lakh crore revenue including Rs 26.06 lakh
crore from taxes, capital expenditure outlay rise by 11.1 per cent to Rs
11,11,111 crore, 3.4 per cent of GDP, a 50-year-interest free innovation
loan and foreign direct investment of $596 billion – twice the inflow during
2005-2014, the UPA period, inflow.
But a matter of concern is its fiscal deficit and maturity
of dated securities, long term bonds that are to mature and have to be repaid.
Though technically fiscal deficit comes down to 5.1 per cent from last year’s
5.8 per cent, she said gross and net borrowings through dated securities would
be Rs 14.25 and 11.75 lakh crore. Total debt, external and internal, at Rs
168.72 lakh crore on 31 March 2024 is set to rise to 183.67 lakh crore.
Outstanding debt has increased by Rs 15 lakh crore entailing the higher
interest liabilities.
One interesting factor is the technicality in economic
terms, and she is right. Debt is earning and boosts GDP. The Finance Ministry
so far has never reneged on its repayment commitments. The debt burden seems
higher than revenue earnings.
The finance minister has cut Rs 32000 crore subsidies in
food, fertiliser and petroleum. The food subsidy cut comes amid the rising
minimum support prices. It banks on reduction of numbers of beneficiaries
following Adhar linkages. The allocation to MNREGA, however, is raised to Rs
86000 crore from Rs 60000 crore of the current fiscal.
Outgo to States as their share of revenue is Rs 22.22 lakh
crore. Interest payment liability has been budgeted at Rs 11.90 lakh crore,
10.18 per cent more than 2023-24. The innovation funding as interest free loans
for 50 years may be reviewed. The timeframe is too long though and may give a
psychological edge.
Sitharaman has not announced any concession on the tax
front. The highest income tax rates remain at 39 per cent while corporate tax
remains at 22 per cent and a new venture 15 per cent. Her core supporters are
critical as she ignored the “middle class” facing high cumulative inflation of
27.5 per cent in five years at the rate of Reserve Bank’s India’s 5.5 per cent
a year. One comment is interesting. It says, “We are clearly not a vote bank
that needs to be appeased”.
Expectedly her focus is on climate, farmers, agriculture
growth and other measures that would immensely improve the conditions of the
people as per the principle of ‘Reform, Perform and Transform’ and goes on to
include MSMEs, aspirational districts, the Eastern region, and its people –
Bihar and West Bengal, key electoral targets! Other than the PM housing for
rural area, for the first time she mentioned housing for the middle class “living
in rented houses, or slums, chawls and unauthorised colonies” to buy or build
their own houses.
Along with are mentioned agriculture and food processing to
employ 10 lakh persons, post-harvest activities including aggregation, modern
storage, supply chains and marketing, intense dairy development, setting up of
fisheries department to boost Matsya Sampada, five aquatic parks and sea food
exports. Also announced was the Atmanirbhar Oilseeds Abhiyan. The premise is
that these sectors would transform critical sectors and please the crucial
electorate in the farm sector in various parts of the country. However,
difference of farmgate prices and high retail for consumers has yet to be
bridged.
Women have been wooed in different ways. A laudable scheme
of course is vaccination for girls in age group of 9 to 14 for prevention of
cervical cancer. Similarly, maternal and child health care is being brought
under one comprehensive programme. Anganvadis are upgraded as centres for
nutrition delivery, early childhood care and development. Ayushman Bharat
benefits are being extended to all Asha, Anganvadi and helpers. It is expected
to incentivise the grassroot workers.
Overall health has got Rs 1095 crore more at Rs 90,170
crore and education Rs 13000 crore at Rs 1.25 lakh crore. The budget also
effects cut in Rs 32000 crore subsidies in food, fertiliser and petroleum.
The government is adhering to the fiscal glide path,
retaining the capex focus offering as much as trillion rupees in 50-year
interest-free loans to private players to take up scientific research. The
finance minister is buoyant on consumer confidence and has subtle satisfaction
of inflation being in the 2 to 6 per cent range even though the RBI has been
insisting on 4 per cent target for stabilising the economy.
The government’s growth strategy seems to be one that will
kickstart a virtual cycle while guarding against fiscal slippage, in view of
international war situations. The budget has many promises making good noises,
but one only hopes that the final July budget would be different.---INFA
(Copyright, India News & Feature
Alliance)
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