The Union Finance Minister’s Budget 2024 speech, though brief, is marked by clear intentions and a strategic vision. The focus is on three primary aspects: a long-term vision for Vikisit Bharat@2047, addressing unemployment, and navigating coalition government dynamics. However, the lack of detailed plans raises questions about the feasibility of achieving these ambitious goals.
Vision for Vikisit Bharat@2047
The Budget lays out a comprehensive vision for Vikisit Bharat@2047, structured around nine priority areas. This long-term vision aims to guide future Budgets in adhering to these priorities, ensuring a sustained effort towards achieving these goals.
Focus on Unemployment
Recognizing the persistent problem of unemployment, the Budget dedicates significant attention to job creation initiatives. While the intention is clear, the specifics of these measures remain vague, casting doubt on their potential impact. The Budget outlines various initiatives, but without detailed plans, the effectiveness of these measures is uncertain.
Coalition Government Dynamics
The constraints of a coalition government are evident in the Budget, with some measures reflecting political compromises. These dynamics affect the clarity and specificity of the proposed measures, leading to a mix of explicit and hidden details.
Fiscal Continuity and Prudence
The Budget signals fiscal continuity, reducing the overall fiscal deficit to 4.9% from the targeted 5.1% in the interim Budget. This reduction is bolstered by a significant surplus from the Reserve Bank of India, reinforcing fiscal prudence. The medium-term fiscal consolidation path is now linked to the debt/GDP ratio, offering the government flexibility to balance higher capital spending with climate goals amid global uncertainties.
Marginal Budget Increase
The Budget sees a slight increase in overall expenditure, yet capital expenditure remains almost unchanged. This suggests a greater reliance on private investment, as indicated in the Economic Survey, despite the lack of significant recent increases in private sector investment.
Discomforting Trends in Expenditure
Two troubling trends emerge on the expenditure side. First, the 2024-25 Budget estimates show only marginal increases or even decreases in allocations compared to 2023-24, notably in commerce, industry, and energy. Second, the revised estimates for 2023-24 are lower than the initial Budget estimates, particularly in social welfare and scientific departments. This suggests potential inefficiencies and a lack of government capacity to fully utilize allocated funds, undermining expected multiplier effects.
Demand and Consumption Measures
To stimulate demand and boost private consumption, the Budget introduces minor adjustments to the new income-tax regime, leaving taxpayers with slightly more disposable income. However, there was room for more substantial tax reliefs, which could have further stimulated demand and increased household savings—an opportunity missed.
Employment Initiatives
The Budget proposes several measures to boost employment, such as an internship scheme, incentives for companies hiring first-time employees, and support for MSMEs through a credit guarantee scheme. However, these initiatives may face implementation challenges and fail to address broader issues like social aspirations and technological changes affecting the labor market. The success of these measures depends on creating a conducive environment for MSMEs to operate and grow.
Key Omissions
Despite addressing various sectors, the Budget conspicuously omits significant areas like Railways, the PLI Scheme, Gati Shakti, and the Census. Additionally, there is a lack of bold steps for the education and health sectors, crucial for leveraging the demographic dividend. Balancing urban and rural development and distinguishing between jobs and internships are essential for a holistic approach to economic growth.
In summary, while Budget 2024 is strong on intent and vision, it falls short on providing the detailed plans necessary to achieve its ambitious goals. The focus on fiscal prudence, unemployment, and long-term vision is commendable, but the lack of specifics and key omissions raises concerns about the feasibility and effectiveness of the proposed measures.
