Union Budget 2024: Let's take India forward
Dear Readers,
The monsoon is in full bloom in Mumbai. It's really pleasant watching the rain through a car windshield at night, wiper blades working in tandem with melodious Hindi songs. The city's landscape, bathed in the glow of yellow lamp posts amidst the showering rain, is enchanting. It's not just Mumbai; rain is pouring across India, prompting economists to scrutinise the data. Will the level of rain increase inflation due to a shortage of food supply? Are our reservoirs sufficiently capacious? Is the Kharif sowing promising? These are pertinent questions. However, the real focus should be on the strategies the government adopts now and specifically in the Union Budget, scheduled for July 23rd, which will cultivate our future.
I've received over 100 emails and messages from various leaders and institutions outlining their Budget expectations. While many of these hopes might not make it to the red bahi khata that Finance Minister Nirmala Sitharaman will present, expectations persist year after year.
Perhaps nothing will change. The metro you take to work will be the same, and the crowds in local trains won't lessen. Roads will stay congested, and the cacophony of vehicles won't diminish. You'll still wait for your turn at elevators in skyscrapers, rush to punch in before the clock changes, and perhaps promise to start earlier the next day after missing your parking spot by a few minutes. Neither the taste of vada pav nor the pav bhaji will change. But still, India looks at the finance minister with a big hope. Even if announcements are made, they take years to materialise. Yet people remain hopeful.
Budget and expectations
India is growing and there should be a clear roadmap for Viksit Bharat. As the adage goes, 'what brought us here will not take us there', it is pertinent that the Budget narrates the roadmap of India’s future. As the world is changing, the government must have a policy to take India forward. Insurance, credit for all, and financial inclusion are ongoing efforts and tax relaxation is almost done and dusted with the old and new tax regimes. However, the emerging middle class is hoping for more ways to save tax, as it is already paying directly and indirectly substantially.
There is a consensus that the government may not spend more this year. Because the government's focal point is to achieve the Fiscal Deficit target. In a recent report, Goldman Sachs said the government would achieve the 5.1% fiscal deficit target and add a hard strainer or filter to spending as the scope for spending is very narrow. The government's target is to bring down the FD to 4.5% by 2026.
Analysts say the enhanced fiscal headroom, bolstered by a larger-than-expected surplus transfer from the Reserve Bank of India, is expected to sustain momentum in capex expenditure and increase targeted welfare spending.
"Job creation supported through capex, targeted social sector spending, and a focus on the 'Viksit Bharat' plan are likely to be pivotal themes in the upcoming Budget," brokerage Morgan Stanley has said.
Broadly, agriculture, social development and rural areas are integral parts of Budget spending. Currently, macro stability is going to be the government's primary focus area. But while there is a need to support these sectors, the government must look at freebies and subsidies rationally. The key is to generate jobs and not to adjust that by financing via subsidies. Remember, more the freebies, more the burden on the taxpayer, particularly the emerging middle class.
Budget: Taking India Forward
The great news is the Indian economy is set to double in the next 5-7 years. But the question is do we have an infrastructure and ecosystem of similar size? The Budget should provide such guidance. The government's vision of Viksit Bharat has rebranded India's identity and foreign investors don't want to stay away. But the icebergs of red tape should melt. There is a lack of coordination between states and the Centre. A lot has improved but a lot of policies are still lost in percolation from top to bottom. We have accelerated the speed of infrastructure but focus on smart cities should be a top priority, else metros and top cities will remain overcrowded. Back offices and data centres can be shifted to small towns, but power supply issues will stop them from doing so. Hence, while allocating funds for villages we need to keep the digital aspect in mind.
The time is ripe for India to focus on the new economy. The gig economy is expanding, and many sectors need attention. Despite India's incredible landscape from Visakhapatnam to Mumbai and Kashmir to Kanyakumari, how many places are truly tourist-friendly? The consumption cycle is accelerating, and aspirational Indians are travelling abroad. A report by Booking. com and McKinsey forecasts that Indians will spend $410 billion on travel by 2030, up from $150 billion in 2019. Many Indians might choose foreign destinations due to inadequate facilities in Indian tourist spots. Tourism is just one sector, but we need to identify more growth drivers. The hospitality sector has realistic demands regarding GST, which varies by season, though GST isn't part of the Budget. Startups are concerned about Angel Tax, and corporates seek reduced compliance burdens without retrospective changes. Jobs and the vision of Viksit Bharat will undoubtedly be key factors.
We have filed several stories on Budget expectations, click here to read them.
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Happy Reading
Amol Dethe,
Editor,
ETBFSI.
A family member of Shri @narendramodi Ji, full time @BJP worker, aspiring entrepreneur & cohort member at Insurjo' 24. Willing ?? to contribute to building a thriving nation in the best possible way.
4 个月It's the ModiJi's government working on delivering GandhiJi's Gramothan as well with the Vikshit Bharat Sankalp.