Gone are the days when the Union Budget was a straightforward and easily understood statement of accounts. People heard the Finance Minister mostly to learn how much income tax was being increased or decreased. Any decrease led to nationwide celebration. Now, the numbers are secondary. It is now a carefully calibrated arrangement of ‘pull and push’ incentives that addresses the most specific of sub-sectors in the attempt to energise the economy. It is hard for the layperson to make sense of the intricate web that has been weaved.
This year’s budget presented by Finance Minister Nirmala Sitharaman, for the ninth consecutive time, is an example of this phenomenon. The numbers by themselves are basically strong – the fiscal deficit and inflation are under control, finances are up, there is a considerably larger allocation for the states, etc. However, the challenge before her this year was to prepare the economy for the coming changes in the overall structure. New technologies such as AI and other data based industries are going to impact wealth generation. Infrastructure growth requires more than mere plans and fund allocation – the inter-linkages between the components and the areas they serve each require implementation reforms.
Also, tax collection is no longer merely taking a percentage of income earned. There are many ways in which people accrue wealth and spend it – all these need to be covered and dealt with justly. Old applications of the law meant that there was a tax on payment of compensation for motor vehicle accidents; or on health insurance premiums, etc. These anomalies need to be noticed and removed. There are many such in various sectors and this budget has been quite technical for this reason.
While India’s is a growing and largely self-reliant economy (because of various challenges faced in the past), it has also been less innovative owing to lack of competition. There are very few Indian corporations making a mark on the global scenario, with most quite happy to continue making money in the old ways. This has hampered the entry of investment needed to fund the rapid growth required. The youth have to be prepared for the new kinds of employment, otherwise dependence on imports will increase. All this is important now that the economy is being opened up, and new and non-traditional markets targeted for expansion. It is this complex scenario that faces the government and it goes to its credit that there is a deeper understanding of the economy than the old ‘tax and spend’ approach.
