Sprinting to Top 5 : FM Hi debt funds Rs 45 tr budget

Shivaji Sarkar *

It is a sparkling poll budget right from the address of the President Draupadi Murmu’s address harping on the economy to Finance Minister Nirmala Sitharaman harping on need to give hope to the people, attract investments, highest capital expenditure, focuses on rural recovery with housing, post-harvest activities unveiling series of programmes for farmers, women, middle class and dream GDP growth of 7.3 percent.

The election emphasis becomes sharper in the President’s speech as she unfolds the narrative of space to the economy and the Finance Minister announces bringing White Paper on mismanagement of the economy till 2014 that marks an era of one of the five fragile economies led by Congress-led UPA. It may also illustrate how it is becoming one of the top five economies.

The President in ceremonial address to the joint session in the new Parliament Building’s Lok Sabha presented the Govt’s achievements over 10 years across a variety of areas, offering a glimpse into the issues the BJP-led NDA might focus ahead of the 2024 elections.

”Since childhood we have been hearing the slogan of “Garibi Hatao” (Indira Gandhi’s plank in 1971), now for the first time in our lives, we are witnessing eradication of poverty on a massive scale” adding that the poor people, youth, women, and farmers would be the four ‘strong pillars’ of Viksit Bharat. Sitharaman also repeating the “four pillars” stresses on various programmes on the path to progress and growth. She harps repeatedly on all kinds of farming classes–farmers, fishermen and dai- ry developers, potential voters.

The interim budget is not without its focus to impress. It has large figures like Rs 47.65 lakh crore expenditure (about Rs 3 lakh crore more than 2023-4), Rs 30.8 lakh crore revenue including Rs 26.06 lakh crore from taxes, capital expenditure outlay rise by 11.1 percent to Rs 11,11,111 crore, 3.4 percent of GDP, a 50-year-interest free innovation loan and foreign direct investment of $ 596 billion–twice the inflow during 2005-2014, the UPA period, inflow.

But matter of concern is its fiscal deficit and maturity of dated securities, long term bonds that are to mature and has to be repaid. Though technically fiscal deficit comes down to 5.1 percent from last year’s 5.8 percent, gross and net borrowings through dated securities, she says, would be Rs 14.25 and 11.75 lakh crore.

Total debt, external and internal, at Rs 168.72 lakh crore on March 31, 2024 is set to rise to 183.67 lakh crore. Outstanding debt has increased by Rs 15 lakh crore entailing the higher interest liabilities. One interesting factor is technically in economic terms where she is right. Debt is earning and boosts GDP. The Finance Ministry so far has never reneged on its repayment commitments. The debt burden seems higher than revenue earnings.

The FM has cut Rs 32000 crore subsidies on food, fertiliser and petroleum. The food subsidy cut comes amid the rising minimum support prices. It banks on reduction of numbers of beneficiaries following Aadhar linkages. The allocation to MNREGA, however, is raised to Rs 86000 crore from Rs 60000 crore of the current fiscal.

Outgo to States as their share of revenue is Rs 22.22 lakh crore. Interest payment liability has been budgeted at Rs 11.90 lakh crore, 10.18 percent more than 2023-24. The innovation funding as interest free loans for 50 years may be reviewed. The timeframe is too long though it may give a psychological edge.

She has not announced any concession on tax front. The highest income tax rates remain at 39 percent while corporate tax remains at 22 percent and a new venture 15 percent. Her core supporters are critical as she ignores the “middle class” facing high cumulative inflation of 27.5 percent in five years at the rate of RBI’s 5.5 percent a year. One comment is interesting. It says, “We are clearly not a vote bank that needs to be appeased”.

Expectedly her focus is on climate, farmers, agriculture growth and other measures that would immensely improve the condi- tions of the people as per the principle of ‘Reform, Perform and Transform’ and goes on to include MSMEs, aspirational districts, Eastern region and its people – Bihar and Bengal, key electoral target !, PM housing for rural area and for the first time she mentions housing for the middle class “living in rented houses, or slums, chawls and unauthorised colonies” to buy or build their own houses.

Along with are mentioned agriculture and food processing to employ 10 lakh persons, post-harvest activities including aggregation, modern storage, supply chains and marketing, intense dairy development, setting up of fisheries department to boost Matsya Sampada, five aquatic parks and sea food exports. Also announced is Atmanirbhar Oilseeds Abhiyan.

The premise is that these sectors would transform critical sectors and please the crucial electorate in the farm sector in various parts of the country. However, difference of farmgate prices and high retail for consumers has yet to be bridged.

The budget also effects cut in Rs 32000 crore subsidies in food, fertiliser and petroleum.

Women have been wooed in different ways. A laudable scheme of course is vaccination for girls in age group of 9 to 14 for prevention of cervical cancer. Similarly, maternal and child health care is being brought under one comprehensive programme.

Anganvadis are upgraded as centres for nutrition delivery, early childhood care and development. Ayush-man Bharat benefits are being extended to all Asha, Anganvadi and helpers. It is expected to incentivise the grassroot workers.

Overall health has got Rs 1095 crore more at Rs 90,170 crore and education Rs 13000 crore at Rs 1.25 lakh crore.

The Govt is adhering to the fiscal glide path, retaining the capex focus offering as much as trillion rupees in 50-year interest-free loans to private players to take up scientific research. The Finance Minister is buoyant on consumer confidence and has subtle satisfaction of inflation being in the 2 to 6 percent range even though the RBI has been insisting on 4 percent target for stabilising the economy.

The Govt’s growth strategy seems to be one that will kickstart a virtual cycle while guarding against fiscal slippage, in view of international war situations. The budget has many promises but one only hopes that the final July budget would be different.