Economic Highlights

New Delhi, 15 January 2024

Budget &The Voter

HOPES FROM ‘BARE-BONE AFFAIR’

By Shivaji Sarkar 

The Union Budget 2024 may not be a glittering box butcould reveal a lot on the Hindutva economy driving the country on to the fast track. It may not be populist but may have lot for the electorate of ‘New India.’ 

Over the decades a norm has evolved of presenting an interim budget lest the incumbent government could take an advantage in elections. Being the election year, it does not prevent the new budget from coming out with certain surprises as the Constitution does not have any provision for an interim statement of accounts. It will be in that sense a normal budget and the government is within its right to include any proposal. 

It may spring surprises and consolidate the Hindutva importance on swadeshi-led overall growth creating bonanza for investments. All sectors of industry and finances may have a platter and it may go far beyond hackneyed tax reforms.There is elation in official circles about the GDP numbers that is hoped to touch 7.3 percent and a four trillion level. The questions on calculating methodology,however, are disposed as theoretical. 

Some sections of the media announced the income tax limit would be raised to Rs 7.5 lakh to lure the voters, but it wasdenied later. People, however, forget that with the last raise in the limit, the effective exemption is around Rs 7 lakh. So, it does not require an announcement.Finance Ministry officials indicate that the interim budget may have a waiver of tax collected at source (TCS) on individual overseas credit and debit card expenditures up to Rs 7 lakh a year. This is in the realm of speculation and helps only the most affluent.  

There are hopes that in view of the impending elections and unpopularity of the vehicle scrapping policy, government might extend the lives of the vehicles, particularly cars and tractors, as these hit largely the lower strata, or upcoming middle class and farmers the most. This apart it is being said that such vehicles have the lowest emission level of around 1 percent and are no way the polluters. 

The western Uttar Pradesh farmers, strong supporters of BJP, are up in arms to protect their diesel tractors. It is hurting the country’s economy. Most in the government and even in the organisations related to the NDA want that such moves which lead to unpopularity must be rectified. They believe that it gives the Opposition an edge on populist issues such as vehicle scrapping, apparently a move by the automobile makers’ lobby to boost their profits. Besides, farmers are sensitive to many new developments. Their Kisan Samman Nidhi or farmers’ pension of Rs 6000 a year may see an increase to Rs 8000. The allocation of Rs 60000 crore a year might go up in the range of Rs 70000 crore. 

While putting curbs on diesel in the country, exports of diesel by private refineries, including the Russian refinery in India, Nayara, have increased manifold to Europe and the US as their profits swell. Transporters and others want restrictions removed on domestic use of diesel and diesel vehicles. They have also repeatedly said that car scrapping is unique to poor India. Nowhere in the world, even in affluent US or Europe, vehicles are scrapped, and these are allowed to ply for 40 years as scrapping hurts generation of wealth. It may be a good move and help poll more votes, but whether it’s going to happen now is anybody’s guess. 

Concerns have been expressed over the high petrol road cess and tormenting road toll collections. The NHAI needs about Rs 1.25 lakh crore a year, but the total collections are several times more in the range of Rs 7 to 10 lakh crore a year. This is stated to hurt businesses. Transporters want it replaced by an annual contribution on each truck and allowing free movement of non-commercial vehicles. Lower rates and no toll gate are also stated to check inflation and boost domestic tourism industry. These potent issues could have positive impact in the elections. 

Some of the key political concerns are the poor, women, youth, farmers, and tribals, as the BJP-NDA aims a third term in office over Prime Minister Narendra Modi’s stress on ‘inclusive growth’. The Union Budget 2023 too had stressed on these sectors. It is believed to have paid dividends politically in the recent elections to five States--Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram. 

There is speculation that schemes meant for these sections of society might get more emphasis. Education and skill development might get attention to address the aspirations of the youth. The youth at age 18, comprising the first-time voters, are considered an asset for the Sangh Parivar. Similarly, many more welfare schemes for women are likely to be formulated. 

Recall, the Congress too had eyed these issues, particularly aimed at the women in Madhya Pradesh and Rajasthan along with lowering LPG cylinder prices. It would be interesting to watch how Finance Minister Nirmala Sitharaman tailors her budget speech on February 1 on this focal point. Political concern for women is also because it’snow believed that they direct the polling trend significantly. Earlier, this was the male preserve in rural India. Now vocal women are said to challenge the male domination and often youth and rural farm workers are getting swayed by their opinion. 

Additionally, tribals and other backward classes have stood largely with the ruling combine. It might not be a surprise to see special programmes being announced for them. Prime Minister Modi while flagging off the Vikasit Bharat SankalpYatra at Khunti in Jharkhand had specifically mentioned that some sections which were not beneficiary of many schemes would now be on government’s agenda. They may get a substantial share of allocations and it could be the same for the hills and the North-East.Ekalavya Model schools too may get further attention to connect with the people in remote areas. 

Sitharaman herself has downplayed expectations stating that it would be a “bare-bone affair”. This means the major concern is to have the appropriation bill passed to keep the wheels moving till June. Practically it may focus on fiscal discipline, check on expense limits, no major tax reforms though populist policy shift and future path reset is possible. It could do certain course corrections to address the growing debt for an economy touching four-trillion mark. Many hopes even from bare bones!---INFA 

(Copyright, India News & Feature Alliance)