Great as a whole, but 'budget dust' as a sum of parts

Most budgets are imperfect due to their disease to please. Likewise, recession or pandemic budgets are seldom a crackerjack.

Published: 02nd February 2022 08:52 AM  |   Last Updated: 02nd February 2022 09:32 AM   |  A+A-

Illustration: Soumyadip Sinha

Express News Service

Most budgets are imperfect due to their disease to please. Likewise, recession or pandemic budgets are seldom a crackerjack. But on Tuesday, Finance Minister Nirmala Sitharaman came out with both the barrels to present Budget 2023.

As a whole, it’s great, but is ‘budget dust’ as a sum of the parts. The economy has a fever and one could adjust the budget like a thermostat, but Sitharaman, coming from a school of hard knocks handling crisis after crisis, concluded that body temperature is not a cause, but a symptom.

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So positioning herself as an FM for hard times, she prescribed a medicine of moderate government expenditure, but with a phenomenal 24% increase in capital expenditure, or 2.9% of GDP — the highest-ever increase — and should help create jobs for the boys.

She outlined a grandiose India@100 blueprint, but that only merits a polite golf clap. Critics remind about the Hippocratic oath, where a doctor’s first duty is to do no harm and how the sovereign’s little purse can be a heavy curse. Even if we ignore the limited pandemic-related stimulus as chopped liver, Tuesday’s expenditure budget makes one wonder if Sitharaman is indeed taking knives to a gunfight. 

Among sectors, education, and infrastructure all got their due, but the absence of doubling of farmers income remained a mystery meat, while a toned-down privatisation pitch was the ghost at the feast. India’s proposed own digital currency and cryptocurrencies taxation is welcome, though the latter’s legitimacy is still grey. 

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In all, FY23 expenditure will crawl 4.6% to Rs 39.45 lakh crore. The increase is much lower than the projected FY23 nominal growth of 11.1%, which itself is dispiriting. Agreed, being economical wins over extravagance, still, it’s unfathomable why it should be a walk on the financial high wire when revenue is more than handsome. Is it because the FM sees conservatism, not generosity, as its own form of power? 

Fiscal deficit will reduce to 6.4% of GDP in FY23, largely due to revenue expenditure compression. Tax collections were stellar in FY22, yet next fiscal growth is pegged at a lowly 9.6%. Perhaps, the government believes that it’s better to have modest targets and outperform than missing them altogether. Should we strike a gold vein next year, will Sitharaman splurge or settle for the Confucian ideology: When prosperity comes, do not use all? It’s down to the wire.

Disinvestment targets are revised downwards this fiscal. Instead of taking a second bite of the cherry, Sitharaman tempered FY23 proceeds too, which policywatchers believe will be a walk in the park simply with offers for sale. As for strategic stake sales, the hour grows late.

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A 25-year blueprint is nice and costs nothing. But for households, prices of everything are rising. Could the FM have done more for the marginal taxpayer and spur consumption? Hell, yes. If not direct taxes, at least fuel tax reductions would have given us a momentary thrill. But there’s no such luck as budget lacks both small and big bang reforms. It neither favoured populism ahead of Assembly elections, which is laudable.

In sum, economies are often in a disequilibrium, and no FM’s work is ever complete. It may be a folly to view Budget 2023 in isolation, but as a five-part doctrine, it commands a credible aura. For now, it may be wise to stick with prudence and fortitude. But in economics, virtues can become vices and so it’s only fair for Sitharaman to be ready with her seven-league boots.

Rs 39.45 lakh crore

Up from Rs 37.70 lakh crore outlay last year as per revised estimates, of which capital spend was Rs 6.03 lakh crore.

Record borrowing from market Rs 11.6 lakh crore.

This is nearly Rs 3 lakh crore higher than the current year’s revised estimate of Rs 8.8 lakh crore. Total market borrowings for 2022-23 are estimated at Rs 11,58,719 crore. Gross borrowing for next financial year will be the highest-ever at Rs 14,95,000 crore as against Rs 12,05,500 crore Budget Estimate for 2021-22.


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