The Union Budget 2023-24 is likely to be a huge mix of emphasis on agriculture, higher capital expenditure and borrowings. The revenue elements are no more a secret. With the GST, its relevance to indirect taxes is lost. The direct taxes after slashing of corporate taxes should better have been abolished, for it has a higher collection cost.
Opportunities for levying new taxes are limited in the supposedly last full budget of Finance Minister Nirmala Sitharaman. Total receipts, excluding borrowings, for 2022-23 are estimated to be Rs 22,83,713 crore, slightly (4.8 per cent) above that of 2021-22 at Rs 19,34,771. Devolution to States is estimated at Rs 8,16,649 crore in 2022-23. It increased by Rs 79,222 crore last year. Approximately this may rise by Rs 9.20 crore in 2023-24. The borrowings swelling to Rs 166.5 lakh crore in 2022-23 will rise further. It will not be easy sailing for a government in an election year, when it has to boast of performance.
Nominal GDP or GDP at Current Prices in 2022-23 is estimated at Rs 273.08 lakh crore. The growth is estimated at 15.4 per cent as compared to 19.5 per cent in 2021-22. So, agriculture apart from infra might remain the mainstay of Sitharaman’s budget seeing stepping up on captex with major thrust on Gati Shakti and National Infrastructure Pipeline targets.
The agriculture sector may be having big hopes from this year’s budget, hints Investment Information and Credit Rating Agency of India (ICRA). The global food grain crisis has revealed the importance of the Indian agrarian economy. The world food market as well as the domestic doles to 81 crore people may lead to major policy changes. The sector may be on the high-priority list with emphasis on irrigation, seed quality and availability, and agritech, among others. In order to enhance production and productivity of food crops, the Government is implementing a Centrally sponsored scheme of National Food Security Mission (NFSM). The mission aims at increasing foodgrain and food crop production through area expansion in niche regions and productivity improvement.
The ICRA expects the focus on initiatives for improving crop realisations. The increased budgetary allocation towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) would also be used for farm purposes. The ICRA hints at initiatives for improving non-farm incomes like livestock farming and food processing. Milk is 5.2 per cent of the total GDP.
Agriculture employs about 54 per cent of the population and the highest number of jobs at 23.3 crore of the total employment of 53.6 crore. It may give sops to farm sector as industries are also dependent on it. Loans and defaults are the least for this sector against 19.8 lakh crore by the large houses since 2013 (now written off). The country may treat this differently in the run-up to 2024.
It also needs to look at edible oil imports and manipulations that have hiked prices severely. Similarly, the milk cooperatives requiring subsidies now despite higher milk prices do not augur well for the milk economy. The Government has increased allocations by six times since 2014 from Rs 21933 crore to Rs 124000 crore in 2022-23 for farms sector and farmers’ welfare. Besides, Rs. 8513.62 crore allocated for farm research for development of several new high yielding, biotic/abiotic stress tolerant, disease/insect resistant and bio-fortified varieties of seeds.
The mission also provides support to Indian Council of Agricultural Research (ICAR) & State Agriculture Universities (SAUs)/Krishi Vigyan Kendras (KVKS) for transfer of technology to the farmers. The research organizations are supported for undertaking research projects that can help enhance production and productivity of crops. For welfare of farmers, more initiatives on the lines of Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), Pradhan Mantri Kisan Maan Dhan Yojana (PM-KMY), Pradhan Mantri Fasal Bima Yojana (PMFBY), Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PMAASHA), Price Support Scheme (PSS) for pulses and oilseeds, Price Deficiency Payment Scheme (PDPS), Interest Subvention Scheme, Kisan Credit Card (KCC) are a likelihood.
A government facing challenges gives more emphasis on visible quotients for giving more jobs, helping industry sell more and pushes for options that may not be useful in the long term. Toying with expanding insurance either for health or jobs is not viable but that heavily weighs on advisors. With median age being comparable with Bangladesh, India still accounts for a higher rate of unemployment. What is more significant is that Bangladesh has a higher per capita GDP too.
The government is likely to have dedicated allocations for specified large infrastructure projects such as high-speed rail, Jal Jeevan Mission, Bharat Mala, Sagar Mala, Smart Cities, and Inland Waterways. After the seizures on the Himalayas, a review on infra is not ruled out.
Sitharaman may also address demand-side issues at a time when the world may soon shift its sight from taming inflation to keeping recession at bay. There may be a push for electric vehicles (EV). In reality, EV and electrified rail routes increase coal pollution and carbon footprint. As per the draft report of NITI Aayog, the coal demand is expected to rise to over one billion tonnes (MT), in the range of 1,192 – 1,325 MT by 2030.
A wiser decision could have been to withdraw the order for junking cars at 10 or 15 years. This is creating severe problems for farmers and the middle class and exacting avoidable government finance. This is not an area where the government should involve itself per se. Car pollution is the least of all problems and the planners ignore that junking of cars adds to pollution. Replacing it with EVs should not have been a priority as it unnecessarily forces the government to spend more on coal mining and burning. Electricity generation increases by 10.81 per cent to 82.87 million tonnes (MT) in December 2022 against 74.79 in 2021-22. Power generation increased by 15.3 per cent to 98,443 million units.
Despite these possibilities, Budget 2024 is likely to unfold many surprises to perk up the path to prepare for appeasing the people and eventually woo them. — INFA