Budget - Unusual expectations

Dear Readers,

What do you expect from the Union Budget? What is it that you want the finance minister to deliver next week? Of course, we know it's a vote on account and perhaps there are very less chances that the government will deliver something big, but there’s no harm in expecting.

Finance Ministry officials have already made ‘halwa’ this week, which is an annual ritual performed at North Block every year before the Union Budget. The CRPF forces have also strengthened the security at the finance minister's office and the parliament to ensure the confidentiality of the Budget. The questions are many, whether it will focus on growth and boost capital expenditure or reduce spending to curtail the debt, which is significantly high.

We at ETBFSI conducted a Budget Expectation Series. I moderated sessions with 15 top speakers from the BFSI sector over the last months. We have covered their views in various stories which you can see here . But to get a sense of what the people at large are expecting, I spoke to many of my colleagues from different teams and people who are not very finance savvy.

Education, health and women empowerment, and employment are the major areas they want the finance minister to address. Here is my version of what I learned from many people. All can't be covered in the Budget, but yes there could be direction and policies because the issues are relevant and need attention.

Not just education, but skills

There are various policies in education but a lot more is needed. Specifically, I think that reskilling and skill based education is a need of the hour in schools.

Someone from senior management of a blue chip company once told me that, when a top foreign brand famous for its furniture and household items came to India it did not know that people couldn’t assemble even basic products. Carpentry is never taught here in any school, hence people can't even fix the small things. Similar is the case with fixing water taps at home or even replacing fuse or electricity sockets. The majority of the people cannot do it and the challenge today is finding people who can do it.

I remember, in his first Independence Day speech as Prime Minister, Narendra Modi said, “At times, we look for a good driver but he is not available, we look for a plumber, but he is not available. If we need a good cook, he is not available. We have young people, they are unemployed but the kind of young people we seek for are not available. If we have to promote the development of our country then our mission has to be skill development and skilled India.?€

Vocational training is a must for every kid. Along with this, life saving skills are also needed. Hence the Budget should not only allocate funds for primary and higher education they should also look at such skills rationally. As a growing middle class, we should have more of such people.

Importantly, it is high time India should look at the quality of education. In the rural areas kids of the 14-18 age group cannot even write in their own language is a disaster. This will be a burden for the person and the country as well.

Employment - Lack of match

In the digital world, the nature of jobs has also changed. No one could have imagined that GenZ could even think of being a YouTuber as a career. But along with more opportunities, there are more challenges as well. The major one that I see and also I have learnt from many top management of leading companies is, there is no right match. Companies are looking for X skills and applicants are having Y.

So, on one side there are people applying in lakhs for a few hundred jobs, only because they are offered by the government but on the other front, companies are struggling to fill the data scientist, AI experts, GenAI related job positions.

The government has addressed AI in its previous Budget but a lot needs to be done to generate employment. On one hand, jobs are not being generated for educated people, on the other hand, blue-collar jobs are under threat because companies are shifting to automation.

Curiously, the infrastructure and real estate companies are also facing a shortage of labour. Even farmers are unable to find people to work at farms. And there are interesting reasons for this. Government subsidy schemes have helped people monetarily hence many do not feel like working.

The problems of India are very different from Bharat when it comes to jobs.

Specifically with the growing middle class, there will be more challenges in finding people for low-scale jobs.

Health

Post Covid the cost of medical care has gone up. Insurance premiums and hospital charges have become exorbitant. Importantly, new diseases are becoming common due to stressful and sedentary lifestyles and climate changes. The cases of diabetes, hypertension and heart disease are growing. Heart disease remains the top killer in Mumbai, but cerebrovascular conditions, contributing to 14 deaths a day, show a 6-8% increase.

While there could be major reasons, what I think is that the Food and Drug Administration department should be strengthened. Food adulteration at restaurants and in packaged foods is high and takes a toll on people. Many of the food companies add unhealthy ingredients and I doubt many products available in the local stores are even scrutinised.

State of the economy

In fiscal 2023-24, buoyancy in both direct and indirect taxes is anticipated to surpass Budget estimates, contributing to higher-than-expected collections. Despite a lower-than-projected nominal GDP growth, tax receipts are growing high, likely aiding the government in achieving its fiscal deficit target. The conservative estimates from the previous year's Budget are contrasted by the current buoyancy, with the tax-GDP ratio expected to remain elevated at 11.3%. The primary driver for fiscal deficit success is predicted to be increased tax receipts rather than expenditure cuts. Looking ahead to FY2024-25, nominal GDP growth is forecasted to rise, while real GDP growth may marginally slow. This outlook supports a 15% year-on-year growth projection for tax revenue receipts, with broad-based growth across both direct and indirect taxes. This gives the government some relief on the resources front. With GDP growth expected to be above 7%, it keeps the government on track to achieve the $5 trillion economy goal.

Read our monthly State of the economy coverage here .

Right policies

Apart from this, the focus on social security is important. A big demand from the people is that tax structures should also be changed according to todaya's income. The government should focus on bringing more people under the taxation net and restructure current tax slabs. More importantly, when we are a fastest growing economy we need policies in place that will scale up infrastructure and opportunities. We have luxury cars, but there is no control over traffic, we have advanced degrees but no jobs, we have exorbitantly expensive apartments but no quality of life. If we could think about such things broadly, India would be a healthy and happy country. Will the Budget do it?

Apart from this, I am sharing with you the top five stories of the week, Trust you will find them meaningful.

1) General Insurance Council launches a€?Cashless Everywherea€? facility across all hospitals in India

2) Ayodhya Ram Mandir: How much money was spent and what does UP stand to gain?

3) RBI economists propose additional criteria for assessing borrower creditworthiness

4) What next for HDFC Bank after drubbing at the bourses?

5) Kotak Mahindra Bank explains why private capex is low and deposit growth is a challenge

Also, don't forget to join our WhatsApp channel, if you haven't joined yet. Click here to join.

Happy Reading,

Amol Dethe,

Editor,

ETBFSI.