Budget 2023: What They Said about it
The Budget and the budget speech show how far this government is removed from the people and their concerns about life, livelihood and the growing inequality between the rich and the poor
Deceptive and Duplicitous
The Budget and the budget speech show how far this government is removed from the people and their concerns about life, livelihood and the growing inequality between the rich and the poor. I point out with regret that the finance minister has not mentioned the words ‘unemployment’, ‘poverty’, ‘inequality’ or ‘equity’ anywhere in her speech. Mercifully, she has mentioned the word ‘poor’ twice.
In this year’s Budget papers, GDP for 2022-23 has been estimated at Rs 273,07,751 crore, which yields a growth rate of 15.4 per cent, much above the earlier estimate. Given this impressive number, real GDP ought to have grown in double-digits. Yet the FM (and the Economic Survey) put the GDP growth at only 7 per cent this year. Will the government explain?
The claim of real GDP growth is in the face of lower capital expenditure. So, what drove growth in 2022-23? We know that private investment is down, exports are down and private consumption is stagnant. So, how does the government explain the 7 per cent growth in the current year?
There are other numbers that are disconcerting: the lesson to be drawn is that the government is not spending what was promised on key schemes.
No taxes have been reduced except for the small number who have opted for the new tax regime. No indirect taxes have been reduced. There is no cut in the cruel and irrational GST rates. There is no reduction in the prices of petrol, diesel, cement, fertilisers etc. There is no cut in the numerous surcharges and cesses which are, anyway, not shared with the state governments.
Who has benefited from this Budget? Certainly not the poor. Not the youth looking desperately for jobs. Not those who have been laid off. Not the bulk of taxpayers. Not the homemaker. Not thinking Indians, who are shocked by the growing inequality, the rise of the number of billionaires and wealth getting [concentrated] in the hands of 1 per cent of the population. Certainly, not you.
This much is clear: the government is determined to push the fortunes of GIFT city, Ahmedabad, at the cost of other commercial and financial centres. The government is also determined to push the new tax regime for which there are few takers for a variety of reasons. Besides, making the new tax regime the default option is grossly unfair and will rob the ordinary taxpayer of the meagre social security that he may get under the old tax regime.
The Economic Survey listed all the headwinds that the world, and India, will face, but did not offer any solutions to face these headwinds. The Budget speech did not even acknowledge the headwinds. The government is living in its own imaginary world.
Three stark facts are acknowledged the world over: a) world growth and world trade will slow down significantly in 2023 (for India, 2023-24); b) many advanced economies will go into a recession; and c) the global security situation, thanks to the Ukraine war, and other brewing conflicts, will deteriorate.
If all three materialise, what will the government do? What kind of burden will that place on the people who are suffering due to inflation and unemployment? There were no answers in either the Economic Survey or the Budget speech.
This is a callous Budget that has betrayed the hopes of the vast majority of the people.
P. CHIDAMBARAM is a Congress MP and former Union finance minister
The State Is Shrinking
The central government has a serious problem it needs to tackle—the fiscal crisis is driven by its inability to increase revenue. This means that when confronted with the imperatives of fiscal consolidation or priorities it wishes to secure, such as an increase in public investment, it can only do so by cutting something else.
This budget in that context has done a credible job of protecting the budget. The government’s desire, expressed three years ago, was to increase capital expenditure. On the budget itself, capital expenditure has gone up considerably (33 per cent). This means that out of every rupee we borrow, and if the government meets its fiscal targets, less than half will be used for current expenditure or consumption and more than half will be used for investment. That is great because the golden rule of fiscal policy is that we should not borrow to consume in perpetuity.
Less than half of the borrowing going to current spending and more than half going for investment is happening for the first time since 2006. However, this does not mean that the total capital investment has gone up. There is the budget and there is investment by central public sector undertakings. Added together they will be 3.9 per cent of the GDP this year-which was exactly the position they were in 2019-20. What has happened is that public sector has been investing less and the government has to make up for it on the capital expenditure side.
To be able to reduce fiscal deficit and increase capital spending, revenue expenditure has to be cut. In fact the total expenditure too has to be cut. The size of the government’s budget for next year will be smaller than this year and this year was smaller than last year. The state is shrinking. Because of the inability to mobilise revenue. Tax revenues are stuck at 11 per cent of the GDP. That is where they were seven years ago. That is where they were four years ago and that is where they are now.
Regrettably, the performance of disinvestment, much touted by this finance minister when she took office, has been a pathetic disaster. Year after year, disinvestment targets have not been met, not by 10 or 20 per cent but by 70, 80 per cent and more. This resulted in huge revenue losses to the government and the government had to take emergency measures to balance the books.
Given this fragile and low quality of execution that seems to have become the hallmark of the finance ministry on the resource mobilisation side, money for capital expenditure means less money for something else.
RATHIN ROY is MD of Overseas Development Institute, London. Transcribed from video circulated by Centre for Policy Research, New Delhi
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