Editorial: Budget by way of Jenga

NEW DELHI: Finance Minister Nirmala Sitharaman is set to create history as she presents her seventh straight Budget today for the fiscal 2024-25, surpassing the record of former PM Morarji Desai. This year has witnessed an interim Budget in February (as an incumbent government cannot present a full Budget just before general elections); and will see a full fledged one on Tuesday, which will be the BJP-led NDA government’s first since it was re-elected last month.

The Budget could be viewed as a game of jenga as the government must choose between striking a balance between the need to spend more on social sector schemes, while fielding calls from political allies, like the Telugu Desam Party (TDP) and the Janata Dal (United) seeking additional assistance for Andhra Pradesh and Bihar. There is the demand to rein in inflation, spur consumption and investments by putting more money in the people’s hands. The working class has sought a reduction in personal income tax  a hard sell as Sitharaman is keen on bolstering India’s macroeconomic stability and growth, via the reforms drive initiated after 2014.

The Budget is being presented in the backdrop of the Economic Survey projecting India’s GDP to grow between 6.5 per cent and 7 per cent in 2024-25, down from a high of 8.2 per cent in the preceding financial year. The metric is dependent on factors like onset of monsoon and global financial risks. The growth projection in the Survey might be conservative, which has led to experts wondering whether the Budget announcements today will veer towards austerity, or come out all guns blazing.

It’s a question looming large on the electorate’s mind, considering this year’s general election was fronted as an exercise of the essentials  with campaigns focussed on the trifecta of roti, kapdaa, aur makaan (food, clothing and shelter). The overarching emphasis was on the bane of unemployment, rising inflation, and apprehensions around economic and social justice. This is in contrast to the poll pitches of 2014 and 2019 where the candidates attempted to appeal, in a rather Maslow-esque fashion to the higher needs  aspirational, actualisation and emotional.

A report by a transnational bank last week suggested that India would need to grow faster than 7 per cent to create jobs for the youth. Even with the 7 per cent growth rate, we might create 80-90 lakh jobs, when the demand is for 1.1 to 1.2 cr jobs. It’s the Opposition’s favourite pinata to hammer on  India facing its bleakest rate of joblessness in 45 years.

This May, the RBI had approved the release of a sum of Rs 2.1 lakh crore (as a dividend) to the government, over twice the sum estimated in the interim Budget, which has created some wiggle room to spend Rs 1 lakh crore. The NDA government has so far steered clear of freebies (revdis). So the bounty will need to be channelled into deserving pockets  possibly a hike in capex on infra to boost growth and revenues. The indirect tax regime of the GST completes seven years this year, so it is likely that there might be a mandate for reforms and rationalisation in this space. Lowering the fiscal deficit below the budgeted 5.1% of the GDP might be an uphill task owing to the higher expenditure requirements. Sitharaman and Co have a tall order on their hands — presenting a blueprint that would set us on the path to a Viksit Bharat by 2047.