India also needs to broaden its economy by creating new sectors of growth to drive employment generation
Since the majority of the economic activities are showing mixed signs amid broad economic outlooks being positive despite unprecedented geo-political upheavals and Covid related extraordinary disruptions, people have a lot of expectations from the upcoming budget. The focus is likely to be on infrastructure, manufacturing, measures to raise GDP growth, exports and generation of jobs.
However, a section of industry captains and business tycoons are said to have suggested Finance Minister Nirmala Sitharaman to focus on measures to broaden the tax base by rationalising GST and personal income tax slabs, so that consumption could receive a boost, when inflation is touching new heights across the globe, including India, and the people in general are experiencing a lot of hardship.
Thrust on infrastructure, especially railways and highways, appears evident from the continuous focus of the government on them. Similarly, there may be announcements for agriculture, manufacturing, defence, housing, real-estate, auto, startups, IT, exports and others, so that GDP growth rate along with job creation process may receive a big boost.
Particularly, the capital expenditure push for infrastructure, manufacturing and a few others may be on the cards. A slew of measures, including increased spending on infra, focus on private investment, sops for sectors that create additional jobs for the youth, is expected in the budget.
Presently, the global economy is facing a double whammy of slow growth rate and rising inflation. Major countries are forced to raise interest rates to fight rising inflationary pressures, which tend to put more pressure on their economic growth. Hence, a number of financial organizations have predicted a slow growth for the global economy.
Rating agency the Standard and Poor (S&P Global) has forecast a decline in global growth from 3.1 per cent to 2.4 per cent in 2023, led by especially the USA and countries from Europe, who are also facing severe energy crises, owing to the Russia and Ukraine conflict. Aggressive monetary tightening across the globe because of inflationary pressures is making things worse for them. The US Fed has cumulatively raised rates by 375 basis points till date.
However, it is also a fact that amid global uncertainties, India is doing reasonably well, but in the coming days exports are expected to be hit hard, which needs support from the government. Strongly spurred by the Covid pandemic, the healthcare sector is already being given very much importance by the government both at the Centre and in states. Similarly, in the automotive sector, there may be a booster for the electric vehicle segment, as the rising clamour being caused by climate change, has made it mandatory to have a very proactive environment protection policy. There appears a clear indication that the government may announce something important for the education sector. The government is giving importance to the New Education Policy (NEP). While states largely cater to the needs of school education, the Centre also does a lot for the sector to help recover the lost ground. Earlier, the Halwa ceremony marked the final stage of the budget preparation process for Union Budget 2023-24.
Budget 2023-24 will also be delivered in paperless form like the previous two Union Budgets. All the 14 Union Budget documents, including Demand for Grants (DG), Finance Bill, etc., as prescribed by the Constitution, will be available on the ‘Union Budget Mobile App’ for hassle-free access of budget documents by Members of Parliament and the general public using the simplest form of digital convenience after the completion of the Budget Speech by the Finance Minister. The representatives of the stakeholder groups are said to have made a number of suggestions for the forthcoming budget that included mechanism for green certification to help MSMEs, urban employment guarantee programme to boost employment generation in urban areas, rationalisation of income tax, creation of innovation clusters, schemes for improving domestic supply chains, reduction of taxes on electric vehicle, introduction of EV policy, measures to promote India as a hub for green hydrogen, portable social benefit for children, a National Regulatory Authority for Water and Sanitation, coverage of unorganised workers under ESIC, a continuation of public capex, fiscal consolidation, and lower customs duties.
Moreover, India also needs to broaden its economy by creating new sectors of growth to drive employment generation. Policies should be such which bolster domestic demand, inclusion and growth prospects. The captains of industry are asking for continuity in the concessional tax regime for the manufacturing sector and help to channelise funds into the green economy, so it would be interesting to see the Govt’s response in the budget.
(The author is a senior journalist)