Interim Budget 2024- In campaign mode!
Context:
The Interim Budget for 2024-25, presented by Finance Minister Nirmala Sitharaman, is scrutinized against the backdrop of an ‘interim Economic Survey’ claiming transformative growth. This article delves into the Budget’s emphasis on welfare schemes, fiscal consolidation, and spending, navigating through claims and challenges.
Relevance:
GS-03 (Economy)
Prelims:
Budget, PM Kisan,
Mains Question:
Discuss the potential implications for the government’s narrative of transformative growth and its electoral prospects. How does the reliance on rhetoric over substantive allocations impact the credibility of welfare policies? (250 words)
Understanding the Interim Budget:
- An interim budget serves as a brief financial strategy designed to finance the central government’s operations until new elections are conducted and a fresh central government takes charge.
- This budget delineates the expected expenditures and revenues up to the establishment of the new government. However, the incumbent government is prohibited from introducing significant schemes in the interim budget, in adherence to the Election Commission’s Code of Conduct, as such actions could potentially influence voters.
- Moreover, the delivery of the Economic Survey alongside the interim budget by the current government is also restricted. The primary objective of the interim budget is to ensure the uninterrupted continuation of essential government functions until the new administration assumes office.
Key Aspects of the Interim Budget:
- Purpose: The main purpose is to maintain the essential operations of the government until the new administration takes charge.
- Budget Timeline: The effectiveness of the interim budget is limited to March 31, 2024, constraining the spending authority of the existing government beyond this date.
- Votes on Account Provision: Due to the absence of a constitutional provision for an interim budget, the government relies on the ‘votes on account’ provision to secure funds during the interim period. This provision enables the government to obtain the necessary financial resources to meet immediate obligations until the new government assumes office.
Dimensions of the Article:
- Predictable Focus and Background
- The Rhetoric of Transformative Growth
- Rhetoric vs. Reality – A Closer Look at Expenditure
- Agriculture Spending and PM-KISAN Scheme
- Macroeconomic Claims and Fiscal Prudence
- Fiscal Deficit and Political Implications
Predictable Focus and Background:
- Before the Finance Minister Nirmala Sitharaman unveiled the Interim Budget for 2024-25, speculations hinted at a vote-on-account nature.
- Prime Minister Narendra Modi’s assertion reinforced this, stating that an interim budget aligns with close elections.
- The budget speech, predictably, praised the last decade as transformative growth. Part A recounted policies, veering towards welfare schemes attributed to the Prime Minister.
The Rhetoric of Transformative Growth:
- The ‘interim Economic Survey,’ titled “The Indian Economy: A Review,” echoed the transformative growth sentiment. It categorized the post-Independence era into pre- and post-Modi government periods, praising the 2014-24 decade as transformative.
- However, the accolades are interspersed with electioneering language, reflecting the Prime Minister’s own assessments. The narrative dismisses pre-2014 growth as inadequate or unsustainable.
Rhetoric vs. Reality – A Closer Look at Expenditure:
- While the Budget speech focused on welfare schemes, the actual examination of expenditures reveals discrepancies.
- The Controller General of Accounts (CGA) figures for the first three quarters of 2023-24 shed light on budgeted versus revised estimates.
- For instance, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) spending projection increased, but the actual trend shows a decline, contradicting pro-poor claims.
Agriculture Spending and PM-KISAN Scheme:
- A closer look at the Department of Agriculture and Farmers Welfare, overseeing the PM-KISAN scheme, reveals similar patterns.
- Budgeted expenditures increased, but actual spending till December falls short. The PM-KISAN scheme, lauded earlier, witnessed a decline in allocations from 2021-22 to a projected figure for 2023-24, challenging the rhetoric.
Macroeconomic Claims and Fiscal Prudence:
- At the macroeconomic level, the Budget asserts that non-borrowed receipts align with expectations, with tax revenues meeting targets.
- Non-tax revenue receipts are expected to rise significantly, primarily from dividends and profits.
- The surge compensates for a projected fall in miscellaneous capital receipts, showcasing fiscal prudence to appeal to financial markets.
Fiscal Deficit and Political Implications:
- The Finance Minister claims a marginal reduction in the fiscal deficit to 5.8% of GDP, aligning with the budgeted level.
- This positioning aims to please financial markets, emphasizing the government’s fiscal responsibility. However, the political implications of this strategy, as hoped for a “resounding victory,” remain uncertain and contingent on voter response.
Way Forward:
- Examining the Budget against actual expenditure trends reveals a nuanced narrative. The disconnect between rhetoric and allocations, especially in crucial sectors like agriculture and rural employment, challenges the proclaimed transformative growth.
- The election-driven spending surge hypothesis requires closer scrutiny as the government seems reliant on rhetoric rather than substantial allocations.
