As expected, the Union budget presented by finance minister Nirmala Sitharaman was more or less a vision document designed to make India a $5 trillion economic giant by 2024-25. Though the target is very ambitiously set and the government is confident about achieving it without much effort, this budget lacks the fuel and energy to reach there seamlessly. The budget is predominantly a macroeconomic framework and leaves ambiguity on many aspects including avenues of fund and employment generation. There is a hide and seek attitude throughout the presentation as there is no adequate or specific budgetary allocation for many thrust areas such aviation, rail development, water transport etc. In some areas the target and fund allocation are set as a 5-year plan whereas in other areas the allocation is made for next financial year.
So it is difficult to gauge the pros and cons of the budget as a pure financial document at first instance. The budget fails to tackle the most significant intense issues such as high unemployment rates, low consumption rate, slow growth rates where as it burdens up the common man by further increasing the fuel rates.
There are no promising efforts to improve the employment level of the country in short term whereas there is a long term vision to create employment avenues.
The budget is envisioning the rejuvenation of banking and non-banking financial companies as a mode to ignite the growth prospects of the country. The proposal to provide Rs 70,000 crore to public sector banks may boost the economic activity in the country to an extent but that may not be adequate to empower the economy to shift its gears to the top. The funding required for the projects and schemes may partially come through disinvestment of government holdings in public sector undertakings. With an enhanced target of Rs 1,05,000 crore fund generation through disinvestment, the budget is underlining the priority of the government, which includes opening up the doors of central PSUs for strategic partnership with private sector. The budget acknowledges and recognises the contribution made by the private sector enterprises for playing substantial role in growth of the economy and profusely thank them by including 99.3 per cent of the corporates within the reduced tax slab of 25 per cent. The budget embraces the public-private partnership [PPP] model in all investment sectors, including but not limited to railway modernisation, as a medium to fuel the growth level of the economy. The government is all set to approach external debt market to raise foreign currency loans to leverage the fund requirement. Though the external debt to GDP of the country is cited as the lowest in the world, the already ballooned total public debt of the country may pinch our financial growth, if not the borrowed money is invested in proper manner.
While giving thrust for the uplift of rural economy with a total fund outlay of Rs 19,000 crore for rural roads and Rs 60,000 crore for MGNREGA, the budget highlights the importance of upgrading the infrastructure of India through several means. It is envisaged in the budget to upgrade 1,25,000 km of road length in next five years with an estimated cost of Rs 80,250 crore. It is promised that the 100 per cent electrification and clean cooking facility will become a reality and everyone will have a roof above their head to sleep by 2022. Though the Ayushman Bharat is highlighted in the vision statement of the budget there is no allocation of funds for the same. Similarly, the steps for smoothening and empowering the exporting segment are not duly addressed in the budget.
Though the budget abundantly praises the agrarian sector and promises to invest widely in agricultural infrastructure it has not put forward any specific schemes for rejuvenation of the said sector. An idea mooted for marketing agricultural products through producer institutions is the only positive reference about that sector.
Kerala- Hope for better tomorrow.
Unlike budgets of pre-Modi era, this budget gives no prominence to statewise allocation of funds and projects. This, in a sense, demotes the regionalism and promotes the concept of One India. Though there is no explicit allocation of funds for any specific projects or flood rehabilitation package for the flood-hit Kerala, the proposal for comprehensive restructuring of National Highway programme is there as light at the end of the tunnel. It is proposed in the budget that the state road reworks will be developed as second phase of Bharatmala. However, there is neither a definite fund allocation or financing model nor a timeframe specified for the same. The state may bank upon the sectors such as bamboo, honey and Khadi, which are mentioned as focus areas, to generate sustained employment opportunities. The proposal for increasing the customs duty of synthetic rubber may boost the demand of the locally sourced rubber. The proposal for levying an additional excise duty and cess of Rs 1 per litre of petrol and diesel may not go well with the present economic situation of the state.
In order to provide pipe water supply to all households by 2024, the proposal is made to join hands with States under the Jal Jeevan Mission.
The project is a convergence of central and state government schemes and this will ensure recharging of the ground water, management of household wastewater re-usage and rainwater harvesting. The budget is upholding the importance of setting up high quality educational institutions, creation of suitable eco system for start-ups and developing the requirement of skilled manpower in new-age skills like Artificial Intelligence (AI), Internet of Things, Big Data, 3D Printing, Virtual Reality and Robotics. Kerala being a State, blessed with abundant manpower but strained with limited space have to explore all the possibilities to attract investment in the said areas.
Though the budget is helping to understand the goals of the government it fails to give a clearer picture on financial and fund management aspects. There is lack of clarity on many major aspects especially on fund requirement and fund allocation. It does not address the region-wise issues as it tries to see everyone through same glass.
India being a federal state, the region-wise allocation of funds by understanding the exact requirement of each states will more sense than blindly following the concept of “One India”.
