THE GOVERNMENT OF INDIA'S BUDGET FOR 2023 - 24: SOME COMMENTS
The Finance Minister has budgeted a total expenditure of Rs. 45,03,097 crore for 2023-24 (14.92% of the nominal GDP projected for 2023-24) against the 2022-23’s revised estimates of Rs. 41,87,232 (15.33% of the estimated nominal GDP for 2022-23). This means that the total expenditure relative to GDP is budgeted to decline.
Of the total expenditure, capital expenditure has been budgeted at Rs. 10,00,961 crore for 2023-24 (3.32% of the nominal GDP projected for 2023-24) against the 2022-23’s revised estimates of Rs. 7,28,274 crore (2.67% of the estimated nominal GDP for 2022-23). This means that while total expenditure relative to GDP is budgeted to decline, capital expenditure is budgeted to rise. This, as the Finance Minister has put it, “is central to the government’s efforts to enhance growth potential and job creation, crowding private investments, and provide a cushion against global headwinds. ”This is good. One hopes the budgeted increase in capital expenditure actually materialises and, what is more, it delivers the intended outcomes.
The Finance Minister has proposed far reaching changes to promote the new personal income tax regime. The basic idea underlying the new tax regime is to simplify the personal income tax system by minimizing the provisions relating to tax deductions and tax exemptions. As things currently stand, the old personal income tax regime is honeycombed with such provisions. They erode the tax base, complicate the tax system, lack equity and encourage people to misuse them. The provision relating to exemption of agricultural income from income tax is an excellent example of such misuse. Given all this, I welcome the new personal income tax regime.
Fiscal deficit is budgeted at 5.9% of GDP projected for 2023-24 against the 2022-23’s revised estimate of 6.4% of GDP. This will help in fiscal consolidation, but the Finance Minister could have done more. Interest payments have been budgeted at Rs. 10,79,971 crore, higher than what has been budgeted for capital expenditure. And the revised estimate of receipts from privatization of public enterprises and monetization of public assets is Rs. 60,000 crore, against the budget estimate of Rs. 65,000 crore. This is an area with a huge potential for mobilization of resources. One hopes that the Government will work on realizing this potential.
Our current account deficit is another area of concern. It is likely to be around 3.4% of GDP in the current year. That is huge.
Finally, what greatly worries me are our problems of huge unemployment and underemployment. It’s good that the Government has decided to launch the Pradhan Mantri Kaushal Vikas Yojana 4.0 to skill lakhs of youth within the next three years, under which on-job training, industry partnership, and alignment of courses with the needs of industry will be emphasized. But given that our experience so far with the skill training endeavours is not very promising, and that three years is too long a period, the Government, given the urgency of the problem, needs to do something rightaway.
- Anand P Gupta, Former Professor of Economics, Indian Institute of Management, Ahmedabad