Gopal Krishna Agarwal
The last full-fledged budget before the general elections next year has
resisted to be a populist budget 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 ‘Aatmanirbhar Bharat’ package in
the wake of the Covid-19 crisis, will keep the economy on an even keel.
When the global
economies are reeling under inflation and being sucked into recessionary cycle,
India continues to be an outlier with manageable inflation, high GDP growth
rate and a well-calibrated fiscal consolidation glide path. The difference of
Modi Government’s approach to balance the macroeconomic challenges of fighting
recession, controlling inflation and meeting fiscal deficit consolidation
target is very much evident in budget 2023-24.
A major achievement of
the Government has been its management of fiscal affairs. Several challenges on
macro-economic front that stemmed from external factors and were unseen at the
time of presentation of budget last year unfolded as the year rolled by. The
actual expenditure on food and fertilizer subsidy for the current year is much
more than was initially budgeted while the excise tax collected had to come
down due to energy price relief provided to the consumers. Despite this Modi
Government has managed to adhere to the budgeted target of 6.4 percent for
fiscal deficit for the year 2022-23. The fiscal deficit target for the coming
financial year has been put at 5.9 percent of the GDP. Thus the march on the
path of fiscal consolidation continues and the Government has committed to
bring it down in the range of 4.5 percent by the year 2025-26.
The highlight of
2023-24 budget undoubtedly has to be the increased allocation for capital
expenditure which has been increased by 33 percent to Rs 10 lakh crore. Anyone,
familiar with the concept of ‘multiplier effect’ of expenditure would know that
government Capex has a much bigger effect on the economy than government or
private consumption expenditure. After two consecutive years of increase in
government Capex, the Government would have stepped off the accelerator, but,
the increase in Capex under this context is really heart-warming.
The budget focuses on
MSME growth. Capital allocation for collateral free lending to MSME sector has
been increased to Rs 9,000 crores. This will lead to an incremental lending of
Rs. 2 lakh crore to this sector. Custom 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
‘ease of doing businesses’, will help the MSME sector in a major way.
Government has reduced 39,000 compliances and de-criminalized more than 3,000
laws and also introduced Vivad Se Vishwas 2 scheme for enhancing 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 Rs 7 lakh per annum and not pay any
income tax. This is a whopping 40 percent increase over the current exemption
limit of Rs 5 lakh per annum. Also the surcharge on income above Rs 5 crore per
annum has been reduced and the highest marginal rate of taxation will come down
from above 42 percent to about 39 percent.
This year’s budget is a
document with the futuristic vision. Government has listed 7 priorities-
saptarishi- that will guide policymaking up 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 the bio-diversity in wetlands.
Scrapping of old
vehicles also finds a detailed mention in the budget. Establishing Centre of
excellence for artificial intelligence (AI) shows that the budget has vision as
well as ambition. Skill India scheme will henceforth include futuristic skills
like AI, robotics, 3D printing etc. The government plans to set up 100 labs for
developing 5G services. Government has identified the potential of tourism
industry to propel employment and growth of economy and it will see a number of
schemes to realize its true potential.
Government’s
support to agricultural sector and its commitment to the rural economy is
evident from the setting up of agricultural acceleration fund and millet
development program. Schemes like Govardhan yojana and
facilitating natural farming are a case in point. The Government has committed
itself to provide large-scale support to the cooperative sector at the
Panchayat level which can enhance financial inclusion and empowerment of small
farmers. The target for credit to agriculture sector has been fixed at Rs 20
lakh crore. It will ensure that the agriculture sector continues to grow at
over 4.5 percent per annum.
With
this budget and the presidency of G20 this year, Indian economy is poised to
see a new level of global engagement and ensure to achieve the vision of our
prime minister to make India an economic superpower in the coming decade. Truly
this budget is an Amrit Budget- a foundation for Vishwa guru Bharat.
