Budget’s only interim, nothing spectacular

Exuding confidence of a BJP win at the next poll too, FM’s interim Budget steers clear of populism. With crucial fiscal decisions taken outside, budgets are turning into trivial exercises.
Interim Budget 2024
Interim Budget 2024


Kochi | Gone are the days when Budgets astounded people. Over the years, they have lost their significance as most of the crucial decisions that are part of policy-making are taken outside the Budget.

The Budget presented on Thursday was an interim one, or merely a vote-on-account. With Lok Sabha elections round the corner, expectations swirled. However, what unfolded was devoid of grand announcements that could turn into votes. Perhaps, with the rhetoric that has been witnessed over the last few months, be it the temple consecration or the call for one nation, one election, the buildup has been happening and the BJP exudes confidence of securing a third term for Narendra Modi.

One discernible trend of the Modi Government has been the prevalence of noteworthy fiscal announcements outside the Budget. One such announcement was the rooftop solar power plan targeting 1 crore households, coinciding with the temple consecration. It has now found acknowledgement in the Budget. However, there is a veil of uncertainty over the funding dynamics as it is not known whether the government intends fully financing the initiative or, in alignment with past practices, merely extending subsidies.

Despite the expectations harboured by the salaried and middle-class populace for potential tax alleviations, the Finance Minister, delivering a stirring address, refrained from succumbing to populist measures. Emphasizing the Budget's intent to bestow substantial relief upon four key segments – poor, farmers, women and youth – she steered clear of concessions and taxes.

Regrettably, the interim Budget appears bereft of noteworthy escalations in allocations tailored to invigorate employment and agriculture, domains poised to fortify the identified quartet. Of particular concern is the substantial decline in allocations over the years earmarked for the Mahatma Gandhi National Rural Employment Guarantee Act scheme. While it held steady at Rs 73,000 crore for two fiscals, encompassing the ongoing one, a disconcerting reduction to Rs 60,000 crore is slated for the forthcoming year. This is despite the undeniable contribution of the scheme to the generation of employment in rural hinterlands.

From a macro perspective, the anticipated elevation in overall expenditure stands at a modest 6.1 per cent. This increment, unfortunately, hovers scarcely above the inflation rate, offering little solace to the overarching economic milieu.

The Government has encountered challenges in enticing substantial private investment across diverse sectors. The Finance Minister's assertion regarding growth being propelled by government spending, particularly in capital expenditures, raises concerns about the sustainability of such a trajectory. A critical examination of the much-touted announcement from the previous year to elevate the capital expenditure target to Rs 10 lakh crore reveals that the revised estimates now stand at Rs 9.5 lakh crore. This adjustment has led to a reduction in the fiscal deficit for the current fiscal year to 5.8 per cent of the GDP, marginally below the initially targeted 5.9. Looking ahead to the next fiscal year, the projected fiscal deficit is pegged at 5.1 per cent.

Curiously, the disinvestment target has undergone a reduction, with estimates indicating a scaling down to Rs 30,000 crore from the initial target of Rs 50,000 crore for the current fiscal. Intriguingly, this downsized objective persists into the upcoming fiscal.

A notable sector that has garnered attention is the rural housing domain, where the announcement resonates that an additional 2 crore houses slated for construction under the flagship Pradhan Mantri Awas Yojana.

But then, what unfolded could be claimed to be merely an interim budget, with the true fiscal vision poised to manifest under the new government post-election. Hopes are on the forthcoming comprehensive budget, though no indications are available in the interim one, aspiring to surmount the prevailing challenges such as stagnating real wages, inflation and unemployment and also the weakening rupee. Urgency underscores the need for robust measures to address these issues promptly if the commitment to propel the economy to envisioned heights is to materialize.

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