It is the Government's responsibility to make allocation in the Budget considering all the expectations
Finance Minister Nirmala Sitharaman, along with other ministries, has prepared the Budget. Article 112 of the Indian Constitution says that “the receipts and expenditure list of the Government to be laid before the
parliament floor” for each financial year (April 1 to March 31).
The Indian economy is showing a high-growth trajectory. It recently crossed the UK and became the fifth largest economy. Healthy and wise allocations in the Budget will boost the economy. The vision that India can become a $5 trillion economy by 2024-25 can be achieved only when we have the best tenets of the budget and its allocation in various fields.
Many experts and economists believe that the Budget 2023-24 will be balanced. The approach toward the economic growth, focus wisely on every aspect, be it capital expenditure on various infrastructures, education, taxation, provident funds, tax slabs, subsidies, incentives to production linked schemes, push to manufacturing and service sectors, semiconductor-based industries installations, health, banking, housing, defence, rural need and demands.
The Covid-19 pandemic and the Russia-Ukrainian War had created a deep impact on the economy and GDP of the entire globe during 2020-22. India has also been impacted a lot. The overall slowdown in the manufacturing and service sector caused severe employment loss. Hence by a proper budget allocation we can overcome the impacts up to an extent.
Education is an important tool for overall development. The opportunity for education should be given to all. To make education skillful and learning oriented, it needs good books, labs, workshops, infrastructures. The education budget was raised by 11 per cent last year to 3.1 per cent of the total GDP, which is quite less. The expenditure on education is expected to double of the previous year allocation. It should be close to six percent.
Taxes are the primary sources to the receipts for the consolidated fund of India. Taxes can be direct tax which is collected directly by an individual like income tax, corporate tax, property tax, etc., or indirect taxes like GST, state excise duty etc. In Financial Year 2022, the ratio of tax revenue to GDP was almost 17.11 per cent. We can have a higher expectation in the financial year 2023. GST collection of Rs 1.52 lakh crore has been recorded as of October 2022, indicating a positive output. However, many people still avoid the tax by taking unfair advantages of the shortcomings in the tax rules. A good taxation system consists of five basic conditions --- fairness, simplicity, transparency, adequacy and administrative ease.
Investment in the capital market is important as more infrastructure means more chances for manufacturing, employment, tourism and the market. The money for the capital market basically comes from the provident fund, mutual fund, LIC premiums, NSC, bonds and other government authorised investments which have a sure return after a period of time.
According to income tax exemption under 80(C), we get tax deduction. The expectation is to raise the amount by Rs 50,000, presently it is Rs 1.5 lakhs and has not been amended since 2014, while inflation and many other
factors have made Rs 1.5 lakh limit a very lesser value. It should be increased.
The total contribution of the manufacturing sector has decreased in the GDP in recent years. The contribution of the manufacturing sector in GVA was 17.4 per cent in FY-2012, which decreased to 14.5 per cent in FY2021. The government has to step up capital expenditure in this sector. It will help in employment generation as well as more exports can be achieved which will make the target of achieving $1 trillion of economy true.
By the introduction and use of chips in various electronics devices like vehicles, mobile phones and all other appliances, the demand of semiconductor chips has increased manifold, which is met by imports from Japan, Taiwan and China. The expectation is that the government of India should make a proper allocation of budget with the involvement of private partners to make and produce the chips.
Disinvestment is the selling of invested stakes. The government sells public sector undertakings (PSUs) and PSU stocks. The
government announced many
disinvestments in the recent three years, but has been unable to complete the target completely. PSUs like BPCL, OIL, etc., are
profitable companies so the
expectation is that disinvestment of such companies should not
be announced. Even if it is done, there should be moderate
High disinvestment provides revenue while lower disinvestment will save the government for future investment. So, it should be done in a very balanced way.
Our country is the fifth largest economy in the world. The amount of subsidies provided by the government is very surprising, food and fertilizers subsidies amounting to 1/8th (12 per cent) of GDP. Spending on fertilizer
subsidy which is Rs 2.3 lakh crore should be reduced to Rs 1.4 lakh crore and food subsidy to Rs 2.3 lakh crore from Rs 2.7 lakh crore. If the government wants to reduce the fiscal deficit, then it should reduce subsidies. It will definitely make the fiscal deficit balanced, which is targeted around 6.4
per cent of the GDP in current
India has currently more than 83,000 startups and more than 100 unicorns. Due to the recession and pandemic effects worldwide, the funding to startups has dried up. The Budget should announce funds to support startups. It is
the major provider of jobs and it is going to cross $500 billion in
valuation very soon. Various schemes and regulations are needed for the ease of doing business for the startups.
The goal of ‘Atmanirbhar Bharat’ can be achieved by enhancing the defence systems. According to a research institute of Stockholm, India ranks fourth among the Indo-Pacific countries in self-reliant production capabilities of arms but India ranks 2nd largest importer of the arms and defence related equipment. However, we have defence exports of Rs 14,000 crore and the target is to achieve Rs 25,000 crore of exports by 2025.
The objectives of fiscal policy and Budget are to increase the ratio of savings to incomes, raising the rate of investment, flow of expenditure in productive areas, price stability, and reduce inequality. If inequality is not reduced, there will be clashes among the people which will affect negatively and generate instability in the economy. The introduction of GST has also helped in collecting the taxes easily and rapidly. A country’s budget should be balanced. It is also the Government's responsibility to focus on every aspect and allocate the Budget considering all the expectations.
(Ravi Kumar Gupta and Rohan Gupta teach at Madan Mohan Malaviya University of Technology, Gorakhpur)