Budget 2024
- Article 112 of the Indian Constitution states that the Annual Financial Statement (AFS) is the name given to the Union Budget for a given year.
- The nodal body in charge of creating the budget is the Department of Economic Affairs’ Budget Division within the Finance Ministry.
- There are numerous classifications and indications of expenditure, receipts, and deficits, depending on how they are defined.
Important areas from the budget’s point of view for determining the government’s agenda and area of policy concentration:
- In the direction of fiscal reduction, India’s general government debt to GDP in 2022–2023 was 82% of GDP, with interest payments accounting for roughly 17% of total spending.
- The government will keep concentrating on budgetary restraint and working to get the debt on a sustainable course.
- Reach the 2023–2024 budgetary deficit target.
- To make up for lower divestment, there should be strong direct tax collections, increased dividend transfers from the RBI, and public sector projects.
- Tax buoyancy: As the government continues on the glide route to achieve a fiscal deficit of 4.5 percent for 2025–2026, a budgeted fiscal deficit objective of 3 percent for 2024–2025 is set.
- Maintaining the emphasis on capital spending:
- In 2023–2024, the government plans to raise the capex to GDP ratio to 4%.
- The emphasis on capital expenditure is probably going to stay on capex for another year, given its robust growth-promoting multiplier effect.
- Ten percent more capital expenditure, or about Rs 11 trillion, is expected, with infrastructure being the main priority.
The necessity of encouraging consumption:
- The recovery in consumption has been comparatively sluggish and seems to be concentrated in the higher income bracket.
- Although the government has been emphasising growth driven by capital expenditures, it is equally critical that consumption increase.
- Given the dire state of external demand, a recovery in internal demand becomes even more crucial.
- It is necessary to devise strategies to increase demand for consumption.
- For example, a modest reduction in the excise duty on gasoline and diesel by Rs. 2-3 per litre will boost consumption.
- It will aid in keeping inflation under control without materially altering the budgetary calculations.
- Spending more on human resources:
- The government needs to spend money on human capital if it wants the economy to benefit from the demographic dividend.
- increased spending on health, education, and skill development to prepare people of working age for meaningful employment.
- The government is budgeted to boost spending on social services (mostly health and education) from 6.7% of GDP in 2017–18 to 3% of GDP in 2022–2023.
- Government spending on social services accounts for more than one-fifth of GDP in European nations.
- Spending more on these programmes is imperative.
- An emphasis on rural areas and agriculture:
- In India, 65 percent of people live in rural areas.
- It is heavily reliant on the agricultural industry.
- Productivity in agriculture measured in terms of gross value added, or GVA:
- In China, it is a third of that.
- one percent in the United States.
- Enhancing productivity within the industry will contribute to raising rural residents’ earnings.
- utilising cutting-edge technology and improving rural infrastructure.
- Providing rural workers with the necessary skills to transition to the manufacturing and service sectors.
The Way Ahead:
- Encouraging businesses to flourish, putting an emphasis on environmental issues, and elevating the underprivileged segments of society are all imperative.
- Pay attention to the growth’s quality to make sure it’s fair, sustainable, and environmentally friendly.
