Did Budget Answer The Structural & Cyclical Question of The Indian Economy? – by J.V.K.S. Swaroop
As every Coin has two sides Any Budget has its positives and negatives and at the same time it is very important to know whether it is addressing Challenges Raised by present economic conditions, coming this year’s budget created a record by presenting it in a short time(90 min) By the finance minister in the history of independent India and this budget lay down the road For next 25 years(2047) which marks 100 years for India’s Independence, finance minister named this 25 years of journey as the AMRUT KAL, so we should see this budget as a road map for the future depending on the 4 pillars they are 1)PM GatiShakti2)Inclusive Development3) Financing of Investments4) Productivity Enhancement and Investment, Sunrise Opportunities, Energy Transition and Climate Action .going into the pros and cons of the budget (2022-2023) and did it answered the challenges of Indian economy. The budget boosted the Capital infrastructure by 35.4% which is 2.9% of GDP & many other reformative steps Budget allocated 7.50lakh crore for the capital expenditure this will be a multiplier effect on the Indian economy & through PM GHATI SHAKTI scheme GOVT OF INDIA aliens 7 sectors such as 1)Roadways 2)Railways 3)Airports 4)Ports 5)Mass transport 6)Waterways 7)Logistic infra for now govt of India announces projects under road & railways only and they are National highway networks by which Govt of India is going to build 250000 km highways & to bring expressways in India , under railways govt of India brings initiatives like ONE STATION ONE PRODUCT which may create domestic demand for the unique products of the districts this is in line of scheme backed by one district one product , 2000 km rail network brought under kavach (anti-collision device network ),Multimodal connectivity to be prioritized to enhance growth of transportation sector altogether we should this moves from government as the boost to logistic sector according to some reports India spends 14% of its GDP on logistics so this kind of steps may minimize spending on logistics .The agriculture sector sees a major boost for chemical-free natural farming at banks of the Ganga river as the toxic-free food chain is very essential for healthy life this going to be implanted as PM PARAM PRAGATH YOJANA And GOVT of India focused on the Promotions of millets as next year is dedicated as the year of millets. India accounted for 41% of global production for millets it is going to boost exports for the countries like U.A.E, SAUDI ARABIA, NEPAL etc. promotion of oilseeds production will lower our imports bill, to boost technology in the agriculture sector as per economic survey GOVT initiates KISAN DRONES and NABARD is going to fund for such STARTUPS.MSME sector occupies strategic importance in terms of output (about 45% of manufacturing output), exports (about 40% of the total exports) and employment (about 69 million persons in over 29 million units throughout the country) But 40% of MSME does not access formal credit so govt of India interlinked UDAYAM, E-SHRAM, NCS, ASEEM Portals by which recruiting employs, another form of benefits can be delivered in a simple manner and govt also extends time limits for Emergency Credit Line Guarantee Scheme (ECLGS) and govt also revamped CGTMSE with additional credit of 2lakh crore This is the some of the measures taken under MSME sector.To enhance the spirit of COOPERATIVE FEDERALISM Union government provided a loan of rupee 1lakh crore for 50 years without interest, PM – Devine scheme for political, socio, economic development of NORTH EAST INDIA, GOVT of India also introduced VIBRANT VILLAGES PLAN and allowing states fiscal deficit 4% of GSDP on the conditional basis.GOVERNMENT OF INDIA last year introduced ministry of cooperatives in this year budget it allocated 9000 crores for it and reduced ALTERNATIVE MINIMUM TAX to 15% from 18%, It also reduced surcharge to 7% by this move cooperatives will see the profits compared to last year, cooperative credit guarantee fund for developing of cooperative industry. Other important reformative steps are Tele Mental Health Programme helps many people who are mentally affected during the time of the pandemic, BATTERY SWAPPING POLICY for upcoming technological up-gradation of Electronic vehicles, GREEN SOVERIGN BONDS to finance Green projects in the country this is issued by the Indian government for the first time, carbon sequestrations & carbon liquefication are going to be set up in the country to make India carbon neutral by 2070, Government also introduced CENTRAL BANK DIGITAL CURRENCY which is going to be issued by Central bank of India it will have fiat value, Revamping SEZ by involving States role in economic enhancement and government creates Digital varsity & expands its educational TV channels scheme from 12 to 200 channels, FUNDS under MEA has increased to 0.01% majority to fund Afghanistan, Financial inclusion by connecting postal office and making transfer funds like banks.These are the major steps by the GOVERNMENT are helpful, but this is mostly concerned towards SUPPLY SIDE OF ECONOMY
Did This Budget Answer the Structural & Cyclical Question of the Indian Economy? Did it answer social sectors concerns?Indian economy is facing structural and cyclical problems for a few years like PVT expenditure is still short of the pre-pandemic levels and industries are facing low-capacity utilisation and rising inventories primarily because of very low demand in the economy, increase in GST slabs, inflation, Increase in NPA’s & Unemployment this is the DEMAND SIDE CONCERNS OF ECONOMY but I think government followed FISCAL CONSOLIDATIVE Approach to tackle fiscal deficit & inflation. The middle class is the backbone of the Indian economy most of the consumption was by them but no change in the INCOME TAX going to restrict spending.The decline in the fund allocated to RURAL ECONOMY is treated as the heart of the Indian economy allocation for the various sounded scheme was reduced like MGNREGA spending goes down by 0.7%, RURAL development down by 0.3%, Higher education slightly increased by 0.1%, school education increased 0.2%, social welfare increased by 0.1% increase in minimal per cent can’t solve challenges of the economy.The decline in the fund allocated for raw materials of the Agriculture sector Fertilizers are one of the main input costs for the agriculture sector but in the budget fertilizers subsidy fall by 1.05% points not only it fuels subsidy also fallen to 6000 crores from 38,000 crores it is also one of the raw materials for agriculture this may indirectly tend to rise in the price of output of Agri products & other products associate with it, the fund allocated for Crop procurement also reduced this may directly affect farmers and delay the government goal of doubling farmers income.The social sector like health and education sees some of the new schemes but the key problems like the digital divide in the education sector, spending on crucial areas of health are being ignored through many committees recommended increase social sector this budget didn’t do any such kind of reforms Concerns about women’sThe allocations for the Ministry of Women and Child Development remain well under 0.10 per cent of the total projected expenditure in 2022-23. The increasing instances of violence against women demanded that Mission Shakti, Samarthya, and Vatsalya receive increased allocations. But, the combined budget of these is well below 1 per cent of the total expenditure.Women are a large number of the beneficiaries in the schemes which include MGNREGS, National Social Assistance Programme, and Schemes for Welfare of SC, ST, Minorities, and other vulnerable sections.
As the budget has many reformative steps it may only boost supply-side concerns of the economy but not the demand side concerns of the economy mainly decline of Pvt consumption are ignored this may enhance vicious cycle of an economic slowdown through our govt’s estimated growth rate of 9.2% it is mainly due to base effect. Many international reports like GLOBAL HUNGER INDEX, GLOBAL INEQUALITY INDEX, OXFAM REPORT and many stated that there is a rise in inequality in India socially, economically and it is evidenced in our economy by K SHAPED recovery so governments should focus on outcome-based budget rather than the outlay of budget.