Congress leader Jairam Ramesh. File
| Photo Credit: ANI

Continuing its attack on the economic policies of the Narendra Modi government ahead of the first budget of the NDA government on July 23, the Congress on Wednesday said that “India has been locked into a cycle of low investment since 2014” due to a combination of “erratic policy, rampant cronyism, and the ED/IT/CBI raid raj”. The party said the country needs a new liberalised approach to political economy.

Congress general secretary (communications) Jairam Ramesh said the single most important statistic that explains India’s inability to grow faster since 2014 is the “sluggish investment rate”.

“India has been locked into a cycle of low investment since 2014, due to a combination of erratic policy, rampant cronyism, and the ED/IT/CBI raid raj,” Mr. Ramesh said in a statement.

Low investment drags down the medium and long-term GDP growth rates, which in turn brings down wages and consumption growth, he said.

The biggest component of investment, Mr. Ramesh said, the private domestic investment, has been in doldrums since 2014. In comparison to the UPA years, when the investment was in the 25-30% range of the GDP, it has been reduced to 20-25% of the GDP range, he said.

“This is, however, only part of the story. Since at least 2016, multinational companies across the world have been looking to divest from China and invest in other developing countries. India, with a large and growing labour pool, was at the right place at the right time – but this generational opportunity to garner FDI and become a manufacturing and export-oriented economy has been squandered,” Mr. Ramesh said.

Instead of India, Bangladesh and Vietnam have capitalised and have walked away with the benefits, he said. “Sops like corporate tax cuts and PLIs can’t compensate for a freer society, polity, and economy – one that is free from demonetization-like masterstrokes, cronyism, and Raid Raj,” Mr. Ramesh said. Marginal policy tinkering will not work, he said.

Congress general secretary Jairam Ramesh. File
| Photo Credit: PTI

The Congress on July 12 said the forthcoming Budget must address fundamental questions such as why private investment is “very sluggish” and private consumption is not picking up as the party dismissed claims that economic growth is accelerating sharply and large numbers of jobs being created.

Union Finance Minister Nirmala Sitharaman is scheduled to present the Budget for 2024-25 in the Lok Sabha on July 23.

Congress general secretary, in-charge communications, Jairam Ramesh said, “The non-biological PM’s cheerleaders and drumbeaters claim that economic growth is accelerating sharply and that jobs are being created in large numbers. But if this was the case — and it is not — Why is private investment, a key engine of economic growth, still so very sluggish recording a 20-year low during April-June 2024? Why is private consumption, another key engine of economic growth, not picking up except at the high end,” Mr. Ramesh asked.

“Why have household savings plummeted to record lows and household debt shot up to record highs? Why have rural wages continued to fall and why is the wage share of national income declining?” he said, adding, why is manufacturing as a share of GDP at a record low and still decreasing? Why has the informal sector lost 17 lakh jobs in the last seven years? Why did unemployment reach a 45-year peak, with unemployment for young graduates at 42%?” the Congress general secretary said.

“These are fundamental questions that the forthcoming Budget will have to address while the Finance Minister sings praises of the non-biological PM,” Mr. Ramesh said.

On Thursday, the BJP claimed that around 12.5 crore jobs were created in the last 10 years of the Modi government and cited the latest Reserve Bank of India report to assert the creation of “five crore jobs in 2023-24 alone”.

Several experts have urged the government to provide tax relief to the common man to boost consumption and take steps to check inflation and accelerate economic growth.

The economy has recorded a growth rate of 8.2% in 2023-24. Earlier in February, Ms. Sitharaman presented an Interim Budget for 2024-25 in view of the Lok Sabha elections.

Union Finance Minister Nirmala Sitharaman during an interaction with Start-Up and Fintech Entities, in New Delhi, on February 26, 2024.
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman nudged India’s financial sector regulators to hold monthly meetings with fintechs to address their concerns and mooted a day-long workshop with law enforcement agencies for such firms to raise any issues they may be facing.

Moreover, the Reserve Bank of India (RBI), and the Department for Promotion of Industry and Internal Trade (DPIIT) will work with the Ministry of Finance to examine issues relating to change of ownership holdings and control of listed fintech companies to enable them to be in sync with regulatory compliance requirements.

These were among the key action points that emerged after an interaction with India’s top fintech entities and the Payment Council of India chaired by the Minister on Monday, in the presence of top officials from the ministries of Finance, DPIIT and Electronics and IT, as well as the RBI.

Sources said that fintech entities and start-up founders appeared unfazed by the challenges facing the Paytm Payments Bank Limited and its parent entity. “No Paytm-related anxiety or concerns were shown by industry representatives at the meeting,” said an official aware of the deliberations.

While efforts to simplify and digitise Know Your Customer (KYC) norms across the fintech segments were mooted, the need to rationalise cost of funds for critical areas, including priority sector loans was also raised.  DPIIT Secretary Rajesh Kumar Singh informed that new patent examiners have been added to reduce the turn-around-time of patent applications. India has over 10,200 fintech entities.

“The Finance Minister noted the rapid growth of the Start-up and Fintech sector of India, especially in the last decade, and welcomed suggestions from the  FinTech leaders to achieve greater Ease of Doing Business and Ease of Living for consumers,” an official statement said, noting that issues relating to cybercrime will be suitably addressed in the new Digital India Act.

Well before Finance Minister Nirmala Sitharaman rose to present the Interim Budget for 2024-25, there were indications as to what its focus would be. Doubts that this would be anything more than a vote-on-account had been settled when Prime Minister Narendra Modi publicly declared that “when polls are this close, the government presents an interim budget” — and went on to say with confidence of a victory in the polls, “we will bring a full budget when a new government is formed”.

Meanwhile, an ‘interim Economic Survey’, innocuously titled “The Indian Economy: A Review”, has presented a survey of post-Independence economic development, with a periodisation that divides those years into the pre- and post-Modi government eras. In language reflective of an electioneering pamphlet, peppered with the Prime Minister’s own assessments of his government’s record, the document concludes that the decade 2014-24 was one of “transformative growth”. Periods of significant or even high episodes of growth prior to that transformative decade are identified as wanting, on the grounds that such growth either left structural challenges unaddressed or was the result of an unsustainable credit boom that damaged the banking sector.

A eulogy

Given this background, it was to be expected that the Budget speech would be a vocal expression of this eulogy of the two governments of the last 10 years. For years, Part A of the Budget speech has been a tiresome recounting of policies already adopted, and to be adopted, many of which have little to do with the issues of resource mobilisation and allocation and the strategy they signal, which must be the actual concern. That has been true of this year’s Interim Budget as well, which focused on all the “welfare” schemes, in areas varying from housing to food, which have been largely attributed to the Prime Minister. It is another matter that the Prime Minister has in the past dismissed such schemes as representative of a “revdi” (sweet gifts) culture when implemented by non-Bharatiya Janata Party (BJP) State governments.

With the Interim Budget being identified as a mere vote-on-account, Part B of the speech was a declaration that while pursuing consolidation in the sense of achieving periodically revised fiscal deficit to GDP ratios, the government will be stepping up spending on infrastructure and welfare. In the circumstances, what can be assessed from the detailed Budget documents is the fiscal performance of the Centre in the current (rather than next) financial year, 2023-24. Even that exercise is fraught with difficulty because the practice of presenting Budgets on February 1 adopted in recent years has meant that “revised estimates” for the financial year incorporate projections relating to most of the last quarter of the financial year extending to March 31.

CGA data sheds more light

The only substantial figures at hand are the estimates of actual expenditure under different broad heads for the first three quarters of 2023-24 provided by the Controller General of Accounts (CGA), which can be compared with the estimates for the whole year provided in the Budget. This is, in certain areas, quite revealing. For example, if we take the estimates for the Department of Rural Development, under which the all-important Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme falls, as compared to budgeted expenditures of ₹1,57,545 crore for 2023-24, the revised estimates are placed at a much higher ₹1,71,069 crore. That points to a significant step up relative to that budgeted, despite claims that the NREGA scheme is being inadequately funded, wages are in arrears and job card holders are being excluded from work because wage payments are to be linked to Aadhaar.

Editorial | Poll posture: On the 2024 Interim Budget

But a comparison of revised and budgeted expenditures conceals what is actually occurring. The actual expenditure on the MGNREGA scheme was ₹1,11,170 crore in the COVID-19 year 2020-21 and ₹98,468 crore in 2021-22. That came down to ₹90,806 crore in 2022-23 and the revised estimate projects spending on the programme in 2023-24 at an even lower ₹86,000 crore. The figures clearly do not match the government’s pro-poor rhetoric. Interestingly, the CGA reports that expenditure of the Department of Rural Development till December 2023 amounted to only ₹1,07,912 crore or 63% of the total projected in the revised estimates. So, more than a third of the estimated expenditure for the financial year is projected to occur in the last quarter of the year.

That deviation between revised expenditures over the financial year and the actual till December 2023 is even larger in the case of the Department of Agriculture and Farmers Welfare, under which the much-touted Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme of transfers falls. The budgeted expenditure for 2023-24 for that department was placed at ₹1,15,532 crore and the revised estimate is projected at ₹1,16,789 crore. The actual till December is placed at ₹70,797 crore by the CGA, or 61% of the revised estimate. Spending on the PM-KISAN scheme alone, which amounted to ₹66,825 crore in 2021-22, fell to ₹58,254 crore in 2022-23 and is projected at ₹60,000 crore in 2023-24.

There are two ways in which such deviations between actual spending till December and the revised estimates in the Budget can be interpreted. One could be that the Finance Minister has chosen to inflate revised estimates of spending to back her claim that the government has provided massive support to farmers and rural workers. The other could be that, despite tardy spending till December, the government plans to launch a pre-election spending blitz in areas where it believes it can swing votes in favour of the BJP. Being election season, the latter is a possibility. But trends of the kind noted with regard to spending on the MGNREGA scheme suggest that the government believes that rhetoric can be a substitute for actual allocations. Thus, despite claims that free rations for 80 crore people are a huge expansion of food support under the National Food Security Act, the total food subsidy has fallen from ₹5,41,330 crore in 2020-21 to ₹2,88,060 crore in 2021-22 and a projected ₹2,87,194 crore (RE) in 2023-24.

Estimates and projections

At the macroeconomic level, the Budget’s claim is that in 2023-24, the central government has managed to ensure that its receipts other than borrowing are almost equal to that budgeted. This is because it has met budgetary expectations with respect to tax revenues as well as expects to raise its non-tax revenue receipts by 25% relative to budget. The explanation for that hefty increase is that income from dividends and profits is slated to rise from ₹99,913 crore in 2022-23 to ₹1,54,407 crore in 2023-24 (RE). This is because, as compared with a budgeted ₹48,000 crore to be received as dividend/surplus from the Reserve Bank of India and nationalised financial institutions, the revised estimates suggest that the actual inflow will be more than twice that figure at ₹1,04,407 crore, largely because of transfers from the central bank. This has more than made up for a projected fall in miscellaneous capital receipts, consisting of receipts from disinvestment from a budgeted ₹61,000 crore to ₹30,000 crore. It is not clear whether even the figure of ₹30,000 crore can be realised, since the CGA estimates that ‘other non-debt capital receipts’, consisting of disinvestment proceeds, just crossed ₹10,000 crore by December.

Estimates and projections of this kind allow the Finance Minister to claim that even while ensuring total expenditure in line with the budgeted, she has managed to keep the fiscal deficit, at 5.8% of GDP, marginally below the budgeted level, hoping to please financial markets with her government’s prudence. Whether it would please voters to give the National Democratic Alliance a “resounding victory”, as she hopes, is yet to be seen.

C.P. Chandrasekhar is an economist and columnist based in New Delhi

India’s Finance Minister announced a new scheme to develop deep tech for defence purposes while presenting the Interim Budget for 2024-25.
| Photo Credit: SHIV KUMAR PUSHPAKAR

For tech-savvy youth, a corpus of ₹1 lakh crore will be established with 50-year interest free loans for providing long term financing or refinancing with long tenures and low or nil interest rates, announced Finance Minister Nirmala Sitharaman while presenting the Interim Budget for 2024-25.

“This will encourage the private sector to scale up research and innovation significantly in the sunrise domains,” she added.

The Finance Minister also said that a new scheme will be launched to develop deep tech for defence purposes.

On electric vehicles, she informed Parliament that government will expand and strengthen the sector through greater manufacturing and charging infrastructure.

(For top technology news of the day, subscribe to our tech newsletter Today’s Cache)

The government has allocated ₹1,500 crore for setting up semiconductor fabs in India under the Modified Scheme, she said.

Counting the achievements of Union Government, the FM said that the Skill India Mission has trained 1.4 crore youth, upskilled and reskilled 54 lakh youth. She added that 3,000 new Industrial Training Institutes (ITIs) were opened.

Nirmala Sitharaman informed that in the last ten years 7 Indian Institutes of Technology (IIT), 16 Indian Institutes of Information Technology (IIIT), 7 Indian Institutes of Management (IIM), 15 All India Institute of Medical Sciences (AIIMS) and 390 Universities have been set up in the country.

She briefed that ₹34 lakh crore worth of Direct Benefit Transfer (DBT) has been achieved in the last decade, and it saved ₹2.7 lakh crore of government as a result.

More than 1360 Agricultural Produce Marketing Committees (mandis) have been digitised, doing a business of 3 lakh crore, she told.

FM informed the house that Digital Public Infrastructure (DPI) has been instrumental in formalisation of the economy.

“Technological advancements are transforming lives and businesses, creating new economic opportunities,” she said.

Watch | Interim Budget 2024 | What’s in it for health sector?

| Video Credit:
Richard Kujur

Health cover under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana will be extended to all Accredited Social Health Activist (ASHA) and anganwadi workers and helpers said Finance Minister Nirmala Sitharaman on Thursday, while announcing the interim Union Budget 2024-25.

While a full budget for 2024-25 will be announced after the new government is formed following the Lok Sabha elections later this year the budget allocation saw an increase from ₹89,155 crore in 2023-24 to ₹90,658.63 crore for the Ministry of Health and Family Welfare while Ayush Ministry also saw a hike from ₹3,647.50 crore to ₹3,712.49 crore.

Budget 2024 live | Interim budget leaves tax structure untouched; FM details Centre’s achievements

For the health sector, the Minister added that India will be bringing in the services of the newly designed U-WIN platform for managing immunisation and intensified efforts of Mission Indradhanush.

“This is to be rolled out expeditiously throughout the country,” the Minister said during her nigh hour long speech.

The other major addition in the sector includes utilising the existing hospital infrastructure under various departments to offer medical seats to students and encouraging HPV vaccination for girls in the age group of 9 to 14 years for prevention of cervical cancer.

The government also proposed to combine various schemes for maternal and childcare and bring them under one comprehensive programme for synergy.

The Minister added that, as part of the Skill India Mission, youth are being trained through various world-class institutes including 15 newly constructed All India Institute of Medical Sciences.

“Several youth have the ambition to get qualified as doctors. They aim to serve our people through improved healthcare services. Our Government plans to set up more medical colleges by utilizing the existing hospital infrastructure under various departments. A committee for this purpose will be set-up to examine the issues and make relevant recommendations,” the Minister said.

The Minister added that geopolitically, global affairs are becoming more challenging with wars and conflicts.

“Globalisation is being redefined with reshoring and friend-shoring, disruption and fragmentation of supply chains, and competition for critical minerals and technologies. A new world order is emerging after the COVID-19 pandemic,” the Minister said. The budget also announced upgradation of Anganwadi centres under ‘Saksham Anganwadi’ and Poshan 2.0 will be expedited to improve nutrition delivery, early childhood care, and development.

The sectors that saw increased allocation of funds in the last 2023-24 budget included Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana, CGHS pensioners, and the National AIDS and STD programme. This year continued with that trend although allocation for development of nursing services did witness a drop.

Image for representational purposes only.
| Photo Credit: The Hindu

As many as 1.4 crore youth were trained and upskilled under the Skill India Mission, Finance Minister Nirmala Sitharaman said while presenting the interim Budget on February 1.

The mission focuses on skilling, re-skilling and upskilling through short-term and long-term training programmes.

Also Read | Budget 2024 live updates

Under the mission, the government, through more than 20 central ministries/departments, is implementing various skill development schemes across the country.

She also said there is a macro-economic stability and the country’s economy is doing well.

Also Read | Interim Budget 2024: Highlights

The government is focused on more comprehensive GDP, governance, development and performance, she added.

A farmer at his paddy field on the outskirts of Bhubaneswar. File (Representational image only)
| Photo Credit: The Hindu

Finance Minister Nirmala Sitharaman on February 1 said as many as 11.8 crore farmers were provided financial assistance under the PM KISAN Yojana.

Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is one of the world’s largest Direct Benefit Transfer (DBT) schemes.

Also Read | Budget 2024 live | FM Nirmala Sitharaman focusses on women, poor, youth and farmers in Budget

Under the PM-KISAN scheme, the government provides a financial benefit of ₹6,000 per year in three equal four-monthly instalments. The money is transferred into the bank accounts of farmers’ families across the country through DBT mode.

Announced in February 2019 in the Interim Budget, the scheme was effective from December 2018.

“Modi government addresses systematic inequalities”

The government under the leadership of Prime Minister Narendra Modi is addressing systematic inequalities, which have plagued the society, Finance Minister Nirmala Sitharaman said.

Also Read | Interim Budget 2024: Highlights

Presenting the Interim Budget 2024-25, Ms. Sitharaman said economic management over the past decade has complemented people-centric inclusive development. “All forms of infrastructure are being built in record time,” she said. She observed that tax reforms have led to widening of the tax base.

“STEM (Science, Technology, Engineering, and Mathematics) courses have seen enrolment of 43% women, the highest in the world,” she added.

Union Finance Minister Nirmala Sitharaman.
| Photo Credit: Kamal Narang

Finance Minister Nirmala Sitharaman on July 29 said the focus of the government is on four Is — infrastructure, investment, innovation and inclusiveness — to make India a developed nation by 2047.

She said India has necessary wherewithal to meet the goal set by Prime Minister Narendra Modi.

Besides several investor-friendly reforms undertaken by the government, she said, India has a very vibrant young population and the emphasis on skilling them to suit the requirement of the economy would yield dividend.

With the aim to build India a developed country by 2047, she said “the emphasis has been on four different issues [Is]. We are looking at infrastructure [first I] in a very big way. In the last 3 to 5 years, consistently, the public expenditure for infrastructure building has been ramped up significantly and it will reach Rs 10 lakh crore in 2023-24.” With infrastructure comes investment (second I), she said, adding that emphasis on investment will promote greater participation of both the public and private sector.

So, she said, infrastructure is not just going to be physical such as bridges, roads, ports or airports, but also creation of digital infrastructure is given importance.

“We are looking for both public investment and private investment and creating necessary environment, the ecosystem as we often refer to for attracting private investment. And the global discussions which are going on blended finance is also something which we’re looking at,” she said at an event organised by CII here.

Pointing out that innovation is the third I, she said, “the government has opened up several areas inclusive of the space, nuclear energy, looking at getting out of fossil fuels. We have enough reason to believe the youth today are giving us solutions, which are very good for the frontier technologies that we’re talking about, as much as for the legacy issues which persist in India for which we need solutions.”

On the fourth I, inclusiveness, she said, “as we aim to reach for the developed nation in 25 years by focussing on inclusiveness, making sure that every section of India, the common man, benefits by everything that we do [whether] investment or reforms are trying to take schemes to the people.”

Finance Minister Nirmala Sitharaman holding the Budget Papers at the North Block in New Delhi on February 01, 2023.
| Photo Credit: R.V. Moorthy

Finance Minister Nirmala Sitharaman on February 1 raised the personal income tax rebate limit, doled out sops on small savings, and announced one of the biggest hikes in capital spending in the past decade as she did a tightrope walk in the Budget between staying fiscally prudent and meeting public expectations in the year before general elections.

Ms. Sitharaman’s fifth straight Budget comes at a time when the economy is slowing and there is a need for increased spending on social sectors as well as ramping up incentives for local manufacturing. The Modi government will seek third term next year and the BJP will face nine Assembly elections this year.

Announcing its last full budget before the 2024 elections, the NDA government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power, and Inclusive Development. This was also accompanied by major tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.

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