There will be an election-oriented budget, it was said. Finance Minister Nirmala Sitharaman not disappointed. The middle class will be busy calculating income tax breaks. Micro, small and medium industries will see the total benefit of penalty waiver, loan and tax concessions.
Scheduled Castes, Scheduled Trbes, Other Backward Classes will want to understand whether the actual benefits are as much as what the Finance Minister talked about them in his budget speech.
The fact is, election-oriented budgeting does not necessarily mean that it deviates from long-term development aims.
Just as MSMEs generate huge employment, which is important from an electoral point of view, the real development of this sector is also good for the Indian economy in various ways.
If the income tax burden can be reduced, especially on the relatively low-income population, while keeping the total amount of revenue collection intact, , it could be good news for the economy by increasing consumer spending.
But this budget left many questions. The allocation has been fixed assuming the rate of financial growth in the next financial year, will the actual growth amount be that much?
If not, where will the money come from? The biggest problem of the moment is unemployment – what does the absence of any direct attempt to address it in this budget indicate?
Notably, allocations to the Rural Employment Guarantee Scheme sector have come down by a huge amount—is the government hopeful that employment will increase in the market without any direct effort?
It can be assumed that the finance minister has thought about job creation and employment through increased allocation in the capital sector.
The expenditure allocated to the capital sector in this budget is unprecedented. There is no alternative to capital expenditure for long-term development.
However, a few questions remain. For example, the allocation to the capital sector in the last budget, as revised in the budget, appears to be less than the expenditure.
If the rate of income growth is not as expected this year due to global factors, and as a result actual spending in this sector is significantly lower than the budget allocation, what will be the impact on employment?
Secondly, the finance minister expressed hope that this increase in government spending in the capital sector would result in a ‘crowding in’ of private investment, i.e. investors would also invest.
What the text book of Arthasastra says on this question, even if it is implied, should not be forgotten that, In the past few years, investors have not given up despite all the benefits. This time, where is the hope?
And in this context it is also necessary to mention keeping the corporate tax rate unchanged.
It is the responsibility of the finance minister to give an account whether there has been any real profit in the financial system in the last three and a half years.
In the budget speech, the young generation came up again and again – the role of that generation in the 2047 target.
Much has been said before about India’s ‘demographic dividend’ or youth opportunity. But achieving those gains required structural changes in education—not just vocational training.
In this budget, the amount of money allocated in the education sector has increased, it can handle the shock of inflation.
If the financial system is to be truly steered towards real development, it is important to abandon the suppress habit of talking about lack of allocation.
