India Needs a Budget for its Young
Introduction:
- According to the Finance Minister’s comments in the 2023 Budget speech, the rest of the world views the Indian economy as a “bright light.” In 2020, India accounted for 20.6% of all people in the globe between the ages of 15 and 29. This suggests that in the upcoming years, one in five troops who are deployed abroad may be Indian. Without a doubt, the rest of the world expects India’s young people to succeed greatly. But are our policymakers moving quickly enough to seize the opportunities that are appearing?
Financial decisions:
- The primary suggestions in this year’s Union budget are listed below.
- On the one hand, there will be a considerable increase in capital investment for the building of physical infrastructure, notably in the sectors of transportation, energy, and defence.
- The administration is committed to reducing the fiscal deficit (FD), which is the difference between tax revenue and expenditures, to 5.9% of GDP, even though tax revenue growth would be moderate. That was only made possible by reducing funding in several other areas.
- Spending on social programmes and subsidies has decreased. Comparing 2023-2024 to the previous year, the Union government will spend less on food subsidies (or Rs 90,000 crore), fertiliser subsidies (or 0.5 trillion), and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) (0.3 trillion).
- It appears unlikely that the modest improvements in spending for agriculture, the Anganwadi programme, health care, and education will have any discernible effects after taking the effect of inflation into account.
Public and private sectors that cross over:
- The Budget’s recommendation to enhance government capital spending is an essential first step in recovering the Indian economy. Investment, which is used to finance the purchase of new machinery as well as the building of roads and industries, is stated as a percentage of revenue or GDP and shows how quickly a country’s productive potential is growing.
- Around the middle of the 2000s came a significant increase in this percentage in India, which peaked at 42% in 2007, breaking China’s previous record. The nation’s economy grew remarkably quickly as a result of high investment rates, and this boom continued into the early 2010s.
- An important turning point was marked by the disruptions and uncertainty caused by the global financial crisis in 2007–2008. In reaction to the crisis, China expanded domestic investment, with the public sector being responsible for a substantial percentage of this rise.
- Yet, the government of India restrained spending because of worries about the growing fiscal imbalances. As governmental spending fell, both private and public investors lost hope. As a proportion of GDP, investment has been continuously dropping, from 33.8% in 2013–14 to 27.3% in 2020–21. If the government’s planned investments materialise and draw as many private investments as the Finance Minister has predicted, the Indian economy may revive.
- Contrary to capital expenditures, subsidies and social sector spending are considered “wasteful,” and it is presumed that cutting their spending won’t have a detrimental effect on economic growth. Instead, a decline in social spending may make it more difficult for the economy to thrive over the long term and may worsen socioeconomic inequities currently present.
- In India, just 9.8% of workers (in 2020–2021) hold regular jobs that provide social security. Because to the COVID-19 pandemic and unemployment, programmes like MGNREGA and the free distribution of food are essential for the millions of underprivileged Indians.
It is best to make investments in people and the future:
- Public spending on social programmes is an investment in the future, particularly in a country where the youth make up the majority of the population. A mother employed through the MGNREGA programme who is in need of money may be able to prevent her children from having to go to school on an empty stomach.
- Underfunding in health and education would hurt India’s chances in a world economy that is more and more knowledge-based. In 2022, only 2.6% of the over 1.9 million applicants who took the National Eligibility cum Entrance Test (NEET) in India were accepted into a government college’s MBBS programme.
- Every year, this country denies millions of young people access to inexpensive basic and higher education. They are further irritated by the lack of legitimate career opportunities for so many educated people.
- Government expenditure on health and education may increase both supply and demand in a knowledge-driven economy by fostering more new teaching and medical careers, especially for women, as well as a larger pool of young professionals and skilled workers.
Irrational concerns about the fiscal deficit:
- Inflating concerns about the fiscal imbalance and government debt won’t help India, a country with vast untapped reserves of people and other resources. Foreign institutions only hold a small portion of India’s government debt, which is why it does not pose the same threat as it did in Greece or is currently posing in Sri Lanka (4.2% of GDP in 2022).
- Much of the debt held by the Indian government is held by public sector banks, insurance companies, and provident funds. In other words, the government owes money to the country’s residents, whose money the financial institutions have used.
- In fact, by borrowing money to create resources that help in the creation of new jobs and incomes, the government is initiating a positive cycle. New revenues will also be generated by rising earnings and development levels, which will be applied to debt repayment.
Conclusion:
- The proportion of persons in India aged 30 and older will rise from 37.5% in 2000 to 58.6% in 2040. On the other hand, by increasing government expenditure on initiatives that support food security, healthcare, and education, millions of youngsters in India could strive to become shining stars that illuminate the world.
