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7 Ways Union Budget Targets General Elections 2024 On the face of it, Union Budget for FY24 seems to focus on sectors and areas which will have overarching benefits. But is that so?

By Saurabh Kumar

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It was the last full Union Budget of the current central government before the nation heads to select the new set of parliamentarians for the next five years starting 2024. It was also the Budget to justify International Monetary Fund's conviction that despite an inevitable slowdown globally wherein the world's largest economies, barring China, will grow less than 2 per cent in FY23, India will grow 6.1 per cent, as announced by the agency on Tuesday.

But all that the government could do was to present a please-the-electorate Union Budget 2023, and, moreover, admit mistakes—albeit subtly—that it has committed in the past few years.

Going by the headline macro numbers for FY24, the picture definitely looks fresh off the easel—the nominal growth rate of gross domestic production is pegged 10.5 per cent for FY24, fiscal deficit at 5.9 per cent, total expenditure at INR 45 lakh crore and highest ever allocation for railways at INR 2.4 lakh crore, among others—but a closer look shows that the paints have dried already.

Finance minister Nirmala Sitharaman in her Budget speech spelt out seven key priority areas upon which the annual financial exercise has been built: inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector. "They complement each other and act as the Saptarishi guiding us through the Amrit Kaal," she said.

As per Vedic astrology, Amrit Kaal is considered the best and most auspicious time to start new work and the government has announced the period between the country's 75th and 100th Independence Days as a period of growth and prosperity. Saptarishi is a cluster of seven stars which are considered to represent the seven sages extolled in the Vedas.

The Budget, for sure, has concentrated on some key areas which will have long-term and overarching benefits: sustainability, digital economy, employment, agriculture, MSMEs and infrastructure, among others. This is in line with what Prime Minister Narendra Modi in his post-Budget speech mentioned. "The Budget is for the aspirational sections of the society—villagers, the poor, the middle class. A Budget to fulfil their dreams," he said.

In fact, the first sentence of the finance minister's Budget speech stated, "We envision a prosperous and inclusive India, in which the fruits of development reach all regions and citizens, especially our youth, women, farmers, OBCs, Scheduled Castes and Scheduled Tribes."

And precisely these are the classes which make you win elections.

It may be an unpopular take—one that is certainly not inspired by oblivion to the fact that these classes need a lot more to realize their dreams and potential—to state that these announcements were at best populist, but there it is. To add insult to injury, some of these measures do not even seem to be substantive in nature.

Apart from the outlay for PM Awas Yojana (INR 79,000 crore), the agricultural credit target enhancement with a focus on animal husbandry, dairy and fisheries (INR 20 lakh crore) as well as improving socio-economic conditions of the particularly vulnerable tribal groups (INR 15,000 crore), all the other announcements were good to hear.

Consider the support for poor prisoners, re-envisioning teachers' training, national digital library for children and adolescents, pharma innovation (read encouraging private sector to invest), and 157 new nursing colleges in co-location with the existing 157 medical colleges established since 2014, among others: these were announcements made without much detail and allocation.

If anything, the Budget seems restrictive. For instance, it was announced that the 50-year interest-free loan to state governments will be continued for one more year to spur investment in infrastructure and incentivize them for complementary policy actions with a significantly enhanced outlay of INR 1.3 lakh crore. However, it was added that the funds will "have to be spent on capital expenditure within 2023-24" by the states, and while most of this will be at the discretion of states, a part will be conditional on states increasing their actual capital expenditure. "Parts of the outlay will also be linked to, or allocated for, the following purposes: scrapping old government vehicles, urban planning reforms and actions, financing reforms in urban local bodies to make them creditworthy for municipal bonds, housing for police personnel above or as part of police stations, constructing Unity Malls, children and adolescents' libraries and digital infrastructure, and state share of capital expenditure of central schemes," stated Sitharaman. As is evident, most of these restrictions pertain to the schemes announced in the current Budget, which will tie the hands of the states.

There are then some subtle admissions of mistakes. For instance, the much-talked about production-linked incentive scheme found no mention. In total, the government has already committed an outlay of roughly around INR 3 lakh crore for the 14 schemes, which cover many sectors, including pharmaceuticals, textiles, steel, food products, auto and electronics, among others. It was widely expected that the scheme—about which the government has been making all sorts of noises including the recent achievement by phone-maker Apple hitting the $1-billion export mark in December by utilizing the scheme—would be further enhanced. Recently, former Reserve Bank of India governor Raghuram Rajan had questioned the claimed success of the PLI scheme.

The government also ate the humble pie by keeping the disinvestment target for FY24 at INR 51,000 crore compared with INR 65,000 crore for FY23, which was missed. The revised estimate for FY23 has been put at INR 50,000 crore. The current government has been aiming high disinvestment targets—to fulfil shortfall in its revenue targets and the fiscal deficit low—unsuccessfully for the past few years. Disinvestment by government is done by selling its assets, such as the dilution of its stake in LIC last year. The public insurer has not seen its issue price of INR 904 apiece since listing, and is currently trading at INR 600, robing general public of their investment.

The Budget also made the new tax regime for personal income tax the 'default' option, which means that unlike earlier, one will have to consciously choose the old regime for tax calculation. Launched in 2020, the new tax regime saw no takers as in the name of higher tax slabs, it took away all exemption benefits. The government has again increased the slab under the new regime only, leaving users of the old regime in a lurch.

While these are just some of the issues one could see on Day 1 of Budget day and more will emerge as the subsequent days go by, readers would be wondering where the seven reasons as mentioned in the headline are. Well, that was just a way to put things at par with the government's liking—put old schemes on mission mode and give it an attractive name (headline in the case of this article).

And here is a piece of proof to (hopefully) substantiate the above analysis: The benchmark Nifty reached an intraday high of 17,972 points around the time the FM finished her Budget speech on Wednesday compared with the previous close of 17,662. The index, however, ended the day at 17,616 points, a loss of 0.26 per cent. That too on a day global cues have been positive!

Saurabh Kumar

Former Editor, Special Projects

Journalist since 2007. 
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