With the global economy adrift, Finance Minister Nirmala Sitharaman sought to carve out an ark for India in her fifth Union Budget by trying to nudge domestic consumption and reluctant private investments upwards, while also seeking to create a feel-good factor among specific segments of voters as the government gears up for the 2024 Lok Sabha polls.
The FM summed up the BJP-led government’s achievements since 2014 as “leaving no one behind”, taking just 200-odd words to outline the doubling of per capita income to ₹1.97 lakh, the increasing formalisation of the economy and the expansion of targeted benefits. She then used the rest of her Budget speech to soothe sections of society that may have felt a tad left behind over its nine-year-tenure.
To assuage the salaried middle class, deflated by a sustained streak of high inflation, the tax-free limit under the new exemption-less income tax regime was raised to ₹7 lakh from ₹5 lakh. The cap on non-government employees’ leave encashment at the time of retirement was raised to ₹25 lakh from ₹3 lakh.
Help for those left behind
The first Budget of the Amrit Kaal -- the 25-year period leading to the centenary of Indian independence in 2047 -- aimed to build on existing “inclusive development” efforts that assign overall priority for the underprivileged, the Minister said. She launched new socio-economic development schemes: the PM Particularly Vulnerable Tribal Groups Development Mission, and the PM Vishwakarma Kaushal Samman to support artisans from weaker sections and Scheduled Castes, Scheduled Tribes and Other Backward Classes.
Some measures were also announced to alleviate the lot of micro, small and medium enterprises that have faced successive shocks over the last few years, from demonetisation to the pandemic.
Poll-pleasing focus on jobs
While the Finance Minister addressed various sections’ aspirations through her less-than-90-minutes speech, the broader underlying message was aimed at India’s restive youth and their hopes of securing a job.
References to “job” creation in a Budget speech hit a six-year high, with the Minister flagging it seven times in different contexts, compared to just two mentions in the 2022-23 Budget speech and three references in the year before that.
Giving an impetus to growth and job creation, and creating opportunities, especially for the youth, she said, was a key focus of the government’s economic agenda to achieve its vision for the Amrit Kaal, which will culminate in 2047.
It is perhaps no coincidence that the last time job creation figured high (with six mentions) was when the late Arun Jaitley presented the Budget for 2018-19 -- another Budget presented in the year before a general election.
Capex plans depend on States
Polls apart, the Budget’s grand plan to ramp up infrastructure capex to ₹10 lakh crore in the hope that it gives greater traction to a revival in private investments will hinge on the States -- which have been offered ₹1.3 lakh crore in the form of 50-year interest-free loans -- doing their bit, and Indian industry being bold enough to take risks during a tumultuous, unpredictable period also marked by rising interest rates.
The deposit limit on savings schemes for senior citizens was doubled to ₹30 lakh and a new one-time small savings scheme was also announced for women to invest upto ₹2 lakh with 7.5% returns assured for two years.
An uptick in small savings collections will also help the government fund its fiscal deficit target of 5.9% of GDP in the coming year (from the 6.4% estimated in 2022-23), with net market borrowings pegged at ₹11.8 lakh crore, Ms. Sitharaman said.
While the Economic Survey projected a 6.5% growth for the year ahead, the Budget estimates a nominal GDP growth of 10.5% for its revenue calculations. Finance Secretary T.V. Somanathan explained that this could be derived from any combination of real growth and inflation, and was not a yardstick for hopes about either.