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Economic Development > Budgeting > Union budget
SYLLABUS
GS 3 > Indian Economy > Budgeting and Fiscal Policy
REFERENCE NEWS
Nirmala Sitharaman, Union Finance Minister, presented the Interim Budget for 2024. This budget will be used for the first four months of the next financial year starting in April. The full budget for the year 2024-2025 will be presented in July 2024.
ABOUT VIKSIT BHARAT BUDGET 2024 /INTERIM BUDGET 2024
Vision: Prosperous Bharat in harmony with nature, modern infrastructure and opportunities for all.
Development Mantra: ‘Viksit Bharat by 2047’
‘Sabka Saath, Sabka Vikas, Sabka Vishwas’
Trinity of demography, democracy and diversity backed by ‘Sabka Prayas’
STRATEGY FOR AMRITKAL:1. Sustainability,2.Infrastructure,3.Inclusivity,4.Agriculture
ACHIEVEMENTS OF INDIAN ECONOMY (Highlighted in the Budget)
CRITICISMS OF INTERIM BUDGET 2024
Failed pro-poor rhetoric: Reduction in budgetary spending on social sector schemes like MGNREGA, PM KISAN, PM POSHAN, and Saksham Anganawadi along with a fall in Food and Fertilizer subsidies undermines the principle of inclusivity.
Portrays a misleading picture of the Economy:
The budget highlights a fall in unemployment. But, as per PLFS, regular salaried employment during the last five years has stagnated. Most of the employment generated is unpaid family labor, a clear evidence of disguised unemployment.
The budget emphasizes Atma Nirbharata. But, there is a growing dependence on China for industrial inputs. The trade deficit with China has widened over the years, accounting for one-third of India’s trade deficit.
India’s industrial output and investment growth rate have decelerated on a trend basis over the last 5-7 years.
Ignorance of the agriculture sector:
Govt. promised to double farmers' income. However, there is a significant fall in cultivation incomes not only due to the fall in agricultural prices but also due to a sharp rise in the cost of inputs in agriculture (particularly fertilizers).
Real wages in Rural India have never risen after 2016 and have even fallen after 2020, particularly in the context of crowding of the agricultural labor market by unemployed workers from non-agricultural sectors. (De-industrialization)
Capital investment in agriculture did not rise. Most of the long-term bank credit supplied to agriculture was also diverted away as short-term loans to corporates and agribusiness firms.
WAY FORWARD
Promote Economic Diversification and Innovation: Accelerate economic growth through innovation, entrepreneurship, and infrastructure development. Simplify the tax code to attract investment and enhance ease of doing business, fostering a dynamic and diverse economic base.
Strengthen Social Safety Nets and Inclusive Development: Enhance social welfare programs targeting healthcare, education, and social security to ensure universal access to basic services. Focus on improving the efficiency and reach of welfare schemes to the most vulnerable populations, using technology to streamline delivery and minimize leakages.
Revitalize Agriculture and Foster Rural Development: Encourage sustainable agriculture practices and invest in rural infrastructure to support both agricultural productivity and non-farm employment opportunities. This approach aims to increase rural incomes, promote food security, and reduce urban migration pressures.
Transition to a Green Economy and Enhance Environmental Sustainability: Invest in renewable energy, green technologies, and sustainable resource management to mitigate climate change impacts and promote environmental sustainability. This includes fostering a low-carbon economy and enhancing climate resilience.
Improve Governance, Transparency, and Stakeholder Engagement: Strengthen governance frameworks to enhance transparency and accountability in public service delivery. Foster a culture of civic engagement by involving citizens, businesses, and civil society in the policy-making process to ensure policies are responsive, evidence-based, and aligned with public needs.
The long-term growth of a poor over-populated economy lies in the structural transformation of its workforce away from rural/agriculture to modern industry and services which is the dire need of the hour.
PRACTICE QUESTION
Q: Distinguish between capital budget and revenue budget. Explain the components of both these budgets (UPSC-2021, 10M, 150W).
