Union Budget 2023: Economy Wins As Politics Takes The Back Seat
The India Commentary view
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By Our Editorial Team
First publised on 2023-02-02 05:46:54
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The India Commentary view
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With this
being the last full budget of the NDA government and with elections scheduled
to be held in April/May 2024, there was always the chance that electoral
considerations would get precedence over economic prudence in this year's budget. But Finance Minister Nirmala Sitharaman must be commended for not
playing to the gallery and presenting a growth-oriented budget. The budget has
gone for fiscal consolidation, a strong push for more capital expenditure and tax
reforms rather than announcing financially-bleeding grandiose schemes which
seldom achieve their stated objectives.
The
government will bring down fiscal deficit to 5.9% of the GDP in 2023-24 from
6.4% in 2022-23. The Finance Minister has also wisely slashed subsidies and the
outgo on this will be Rs 1.47 lakh crore lesser in 2023-24 than the revised
estimates for this fiscal. Other prudent measures include not raising the outgo
on PM-Kisan and lowering it for MNREGA. The government will bring down the
revenue deficit too - from 4.1% of the GDP to just 2.9%. These fiscal
consolidation measures will stand the nation in good stead in a year when the
global economic and political situation remains uncertain.
On the
other hand, the tax reforms will make it attractive for those who have not switched
to the new tax assessment regime. Additionally, it will put money in the hands
of the salaried middle class through lower taxes. That in turn will boost
demand which is crucial as exports are falling due to recessionary trends in
global economies and an upswing in domestic demand is essential. Politically
this will help the BJP (as the elections are due next year) without disturbing
the exchequer much as the total outgo on this count will be just Rs 35000cr.
The cut in the surcharge and hence the lowering of the highest effective tax
rate from 42.7% to 39% is also welcome.
Capital
expenditure has been raised by 33% and the push for infrastructure projects
will induce private sector investment, both in the core sector (as demand for
steel, cement and other building materials will rise) and in downstream
industries. This will also help in job creation. The allocation for railways,
highways, power and aviation sectors, among others, will boost infrastructure
and build assets for the development of the nation.
Prime
Minister Modi has repeatedly criticized the so-called revdi (handout) culture.
This budget has walked the talk by refusing to resort to revdis. Instead, it
has focussed on building infrastructure, fiscal consolidation and tax reforms.
This shows that the government is more concerned about development and growth
rather than short-term electoral gains. If it resists the temptation of
undertaking any misadventure (like giving revdis to woo voters) before the
elections (which throws the budget maths haywire), it will show that it is a
responsible government and the objectives of this pragmatic budget will be
achieved to a great extent.
