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The Budget clearly had the 2024 election in mind. However, one cannot fault a government for being political. What came as a pleasant surprise though, was that the Budget was an “ambitious, people-centric agenda to address global challenges, and to facilitate sustainable economic development,” to quote the finance minister. The Budget did not follow the usual approach of spending money and offering breaks to boost industry, giving sops to agriculture to improve productivity and incomes, throwing money at the poor and down-trodden or, tom-tomming increased expenditure for the social sector. There was no direct mention of any “lobbying” group — be they industry, labour, banks or bleeding hearts. A quick word search on the word “poor”, for example, turned up only one mention in the entire speech and that too in the context of poor prisoners who remained incarcerated for lack of their ability to pay the bail money or the penalty.
Was the Budget ambitious? It talked about creating 100 research centres for 5G services-based application development, digital lockers, public digital infrastructure and the setting up of artificial intelligence research centres in educational institutions. Its focus on green growth through innovations in green activities and technology is especially commendable. The finance minister has plans to make 10 million farmers adopt natural farming, for which she has made special provisions to create 10,000 bio-input resource Centres. If they come up as planned, it will create a national-level production and distribution network for more organic micro-fertilisers and pesticides. This will have a long-term effect not only on agriculture but on the lives of those who produce and those who consume farm outputs.
Was the Budget people-centric. First, it had to be as people will vote in 2024. Second, it was done intelligently. We can divide the people into three economic classes — the rich, the poor and the rest. The rest, or the middle class, made up of the salaried, petty professionals and those in the small and medium sectors, have been reeling for some time from the combined effects of demonetisation, inflation and Covid-19. They needed a break and the best way to make these income taxpayers happy is to reduce their tax burden. The direct tax changes have offered them precisely that. The rich also have been given tax breaks. In normal circumstances, the government could have been criticised for this but the effective tax rate was way too high already.
This brings me to the economically poor. Here also the finance minister has put in a lot of thought. The particularly vulnerable tribal group development mission has to be commended. Properly implemented, this can have a huge impact on their lives. The same goes with the expenditure on micro-irrigation in the drought prone regions of Karnataka. In India, education is a ticket out of poverty and no one knows that better than the poor. They cannot but welcome the plan to hire 38,000 more teachers for the 740 Eklavya schools.
Add to these the increased zero-collateral credit access facility and the agriculture accelerator fund for agricultural start-ups, and one opens up myriad possibilities for the small and medium farmers if, only, someone could give them the marketing support they need or, the extant farm laws were repealed. If the agriculture start-ups are successful, there will be an increased pressure from the farmers themselves to repeal the farm laws.
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The Budget is people-centric in other ways too. The youth, as a group, is our largest constituency and they are the ones who will be affected the longest by what the government does today. They need productive employment. For this, they need skills and employers looking for such skills. For that, in turn, one needs investment. It does not matter whether the investment is private or public — they both create jobs. Private investment has been sluggish for quite many years, now and the government has been trying very hard to “crowd in” private investment by increasing its share in total investment. This Budget, too, announces a hefty hike in investment. One hopes that the continued 6 to 7 per cent growth rate of the economy, coupled with global slowdowns, will finally wake up domestic investors from their stupor. This is once again an area where the government is being ambitious in trying to bypass the old-time risk-averse wealth hoarding companies to bring on board young, risk-taking start-ups. Hence, the focus on digital public infrastructure that will encourage innovative start-ups in the digital sector.
Illustration: Binay Sinha
Finally, we come to the finance minister’s promise in the speech of generating sustainable economic development. There are two aspects to this. First is what we usually understand by sustainability — keeping nature intact. Second is the empowerment of people to be able to continue to operate in the marketplace without fear or favour. Furthering green growth through relevant local innovations in technology and enterprise is what the minister’s speech promises. The focus on millet production, for example, is an integrated approach encouraging both its demand and, hence, its supply. Whenever we talk of production boost in India, we focus on the supply side of things. Seldom do we realise that improved supply does not necessarily increase producer incomes unless there is a demand gap to be met. This Budget speech is a refreshing one in that it has not talked about supply alone, and, often, not at all.
The rich, usually, are always unhappy in an economy. Their incomes are taxed the most while their consumptions are treated as luxury and attract higher goods and services tax. This Budget offers them a surprise. Thanks to lab grown diamonds, they may suddenly see a fall in the prices of their diamond rings and necklaces.
The writer is research director, IDF
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
