An Amrit Kaal road map for India to achieve glory
This year’s Budget is a document with a futuristic vision. The government has listed seven priorities (saptarishi) that will guide policymaking on the road to 2047
The Narendra Modi government’s approach to balancing the macroeconomic challenges of fighting recession, controlling inflation and meeting the fiscal deficit consolidation target is clear in Union Budget 2023-24. When global economies are reeling under inflation and being sucked into a recessionary cycle, India continues to be an outlier with manageable inflation, a high Gross Domestic Product (GDP) growth rate, and a well-calibrated fiscal consolidation glide path.
The last full-fledged Budget before the general elections next year has resisted being populist, and the government must be applauded for it. It takes confidence and commitment to stick to the fundamentals of prudent bookkeeping when it makes complete sense to go all-out political. This attribute, which was also visible during the Atmanirbhar Bharat (self-reliant India) package in the wake of the Covid- 19 crisis, will keep the economy on an even keel.
The highlight of the Budget has to be the increased allocation for capital expenditure, which was hiked by 33% to ₹10 lakh crore. Anyone who is even remotely familiar with the concept of the multiplier effect of expenditure would know that government capex has a much bigger multiplier effect on the economy than private consumption expenditure.
After two consecutive years of blistering growth in government capex, there was an expectation that the Centre would step off the accelerator and make more direct cash transfers under various social sector schemes. The increase in capex under this context is heart-warming.
The Budget continues to focus on the nuts and bolts of the economy. Capital allocation for collateral-free lending to the micro, small and medium enterprises (MSME) sector has been increased to ₹9,000 crore. This will lead to an incremental lending of ₹2 lakh crore to this sector. Customs duties have been reduced on a number of commodities to make manufacturing in India more competitive, with raw material availability at lower costs. These steps, together with the continued work on the ease-of-doing-business, will help the micro, small and medium enterprise sector in a major way. The government has reduced 39,000 compliances, decriminalised more than 3,000 laws, and introduced the Vivad Se Vishwas-2 scheme to enhance business and government trust.
Relief in personal income tax was widely demanded and the Budget has respected the wishes of the people. An individual can now earn up to ₹7 lakh per annum and not pay any income tax. This is a whopping 40% over the current exemption limit of ₹5 lakh per annum. The relief, however, has not been kept limited to benefit only people at relatively lower income levels. The surcharge on income above ₹5 crore per annum has also been reduced and the highest marginal rate of taxation will come down from above 42% to about 39%.
This year’s Budget is also a document with a futuristic vision. The government has listed seven priorities (saptarishi) that will guide policymaking on the road to 2047. These have elements of green growth and energy transition while not losing sight of inclusive development and reaching the last mile. The focus and commitment to sustainable growth can be seen from schemes like Mishti, for mangrove plantation, along the coastline and Amrit Dharohar, for preserving biodiversity in wetlands. Scrapping of old vehicles also finds a detailed mention in the Budget. Establishing a centre of excellence for Artificial Intelligence (AI) shows that the Budget has ambition. The Skill India scheme will, henceforth, include AI, robotics, 3D printing and so on. The government plans to set up 100 labs for the development of 5G services. It has also identified the potential of the tourism industry to propel employment and growth, and it will see a number of schemes to realise its true potential.
The government’s support to the agricultural sector and its commitment to the rural economy are evident from the setting up of the Agriculture Accelerator Fund and the millet development programme. Schemes such as GOBARdhan Yojana and facilitating natural farming are a case in point. The government is committed to providing large-scale support to the cooperative sector at the Panchayat level, which can enhance the financial inclusion and empowerment of small farmers. The target for credit to the agriculture sector has been fixed at ₹20 lakh crore. It will ensure that the agriculture sector continues to grow at over 4.5% per annum.
A major achievement has been the management of fiscal affairs. Several challenges on the macroeconomic front that stemmed from external factors and were unseen at the time of the presentation of the Budget last year, unfolded as the year rolled by. The actual expenditure on food and fertiliser subsidy for the current year is much more than what was initially budgeted, while the excise tax collected dipped due to energy price relief provided to consumers.
Despite this, the Modi government has managed to adhere to the budgeted target of 6.4% for fiscal deficit for the year 2022-23. The fiscal deficit target for the coming financial year has been put at 5.9% of GDP. Thus, the march on the path of fiscal consolidation continues and the government has committed to bringing it down to the range of 4.5% by the year 2025-26.
With this Budget and India’s presidency at G20 this year, the Indian economy is poised to see a new level of global engagement and achieve the vision of our prime minister to make India an economic superpower in the coming decade. This Budget is truly an Amrit Budget — a foundation for Vishwaguru Bharat (India as a global leader).
Gopal Krishna Agarwal is the national spokesperson of the BJP on Economic Affairs
The views expressed are personal