The interim budget exemplifies the ‘Nation First’ ideology of Bharatiya Janata Party and the Modi Government. There was widespread expectation that the Narendra Modi government would be tempted to give in to the compulsions of electoral politics and resort to populist measures with an eye on the 2024 Lok Sabha election. Interim Budget 2024 has eschewed any such measure and the government must be commended for it.
While the larger world economy continues to grapple with severe economic challenges, the Indian economy is cruising along quite well due to the far-sighted policies and reforms of the Modi government. Therefore, Finance Minister Nirmala Sitharaman has kept the budget limited to prudent macroeconomic management and the focus on inclusive and sustainable growth.
One of the highlights of the budget is the fiscal management by the government. The revised estimate of fiscal deficit for FY 2023-24 is 5.8 percent of GDP, compared to 5.9 per cent in the budget estimate. This is a big achievement on the part of the Modi government on fiscal consolidation, considering that there is a fall in the wholesale price index (WPI), which affects nominal GDP growth, and the government has also increased its expenditure under various social welfare schemes. The fiscal deficit target for next year is equally ambitious at 5.1 per cent of GDP. The government’s gross and net market borrowing for the coming year will also be less than those for the current year. It will ensure reduced cost of capital for investment by the private sector.
Another important landmark of the government on fiscal prudence is the debt-to-GDP ratio. The estimated gross borrowing for 2024-25 is Rs 14.13 lakh crore, which is much lower than the current year’s borrowing of Rs 15.43 lakh crore, and with the increase in nominal GDP to $4 trillion, the debt-to-GDP ratio will fall drastically in the coming year. Additionally, it will also create space for the government to follow expansionary policy in times of crisis.
Capital expenditure by the government has been the most important driver of economic growth since the outbreak of Covid-19 pandemic. It has been so meticulously planned that apart from generating demand for current goods and services in the economy, such investments are raising the productive capacity of our economy and crowding in private sector investment. With public capital expenditure for FY 2024-25 budgeted at Rs 11.1 lakh crore, the government will continue to play an important role in infrastructure development in the coming year as well, helping in ease of living for the middle class and ease of doing business for the business class.
For inclusivity, farmers, women, poor, and the youth occupy the centre stage in the interim Budget 2024. Prime Minister Modi has rubbished the Congress Party for its sweet talks only on OBC head-on and has reiterated his commitment to the welfare of the OBCs; annadatas, women, the poor and youth are the prime focus of the his Government. The last 10 years of Modi Government have initiated a number of life changing schemes for these sections of our society, be it Ujjwala Yojna and Swach Bharat Abhiyan for our women or Mudra Yojna for our youth. Accepting the fact that rapid demographic change in India has long term consequences, the budget has also announced the setting up of a high-powered committee to study fast population growth and demographic changes.
The approach of the Modi government towards taxpayers has witnessed a sea change from that of previous governments. This, together with leakage and corruption free delivery of welfare programmes, has encouraged people to pay income tax and file tax returns. The number of ITR filed in 2013-14 was 3.79 crore, which doubled to 7.78 crore in 2022-23. A small but significant decision that shows that the government is truly committed to the ideas of ‘Citizen First’ and ‘Minimum Government Maximum Governance’ is its decision to withdraw income tax demand notices, going back from the financial year 1962 till FY 2010 for up to Rs 25,000, and up to Rs 10,000 from FY 2011 to FY 2015, announced in Budget 2024. This is expected to benefit approximately one crore taxpayers.
India seeks to reclaim its status as the Knowledge Capital of the world, a position that it enjoyed for millennia before foreign invaders and later colonialists destroyed indigenous traditions of knowledge creation and preservation. The Modi government rightly argues that a country cannot be truly Aatmanirbhar until it undertakes cutting-edge research and development activities. A highlight of the interim budget is the creation of a ‘research and development fund’ with a corpus of Rs 1 lakh crore.
Recognising the nature of scientific research where a breakthrough can take a long time, this fund will provide long-term finance to R&D projects at low or zero interest rate. Merging the imperatives of green growth and identifying the new engines to propel the Indian economy further, Budget 2024 has provisions of viability gap funding for harnessing wind energy. It has also allocated money for coal gasification. It’s also going to give 300 units of electricity free of cost to one crore households per month and sell the surplus to the grid, under the rooftop solar scheme. This will go a long way in boosting the income and energy security of Indian households.
When the BJP came to power in 2014, India’s position with regard to economic parameters was in doldrums and the country was classified as one of the fragile five economies of the world. In spite of suggestions by many quarters to bring out a white paper on the bad economic situation, Prime Minister Modi decided against it in the national interest of not destabilising the economy further. In the last ten years, India’s economy has come out of all the major challenges and is the fastest growing and the fifth-largest economy of the world. Finance Minister Sitharaman has now announced that the government will bring out a white paper on the economy to continue on the path of economic reform and boost the economy further.
The statements of Finance Minister makes it amply clear that the government is confident of being voted back to power in the upcoming general election. In her interim budget speech, she spoke of the Modi government’s commitment to release in July 2024—when it will present the full budget—a document on its vision of a ‘Viksit Bharat’ by 2047 and a roadmap to realise it. A prosperous India, the groundwork for which was laid in the last 10 years and the superstructure of which will be build in the next few years, will become a source of strength and stability of the global world.