As the nation gears up for the Union Budget, the expectations of the populace from the Finance Ministry are soaring up. Taxes have been the talk of the town since long, and the popular expectation has been revisions in the income tax slab levels. The annual budget ritual generates massive anticipation from different sections of the society and everyone deservedly put forward their demands to the Finance Ministry. The corridors of stock markets to our neighbouring chai tapris remain abuzz with pre-budget discussions. It takes concerted efforts to have a budget balancing needs and requirements from different sections of the populace. As India firmly continues to stead on the growth path, the budget could be a landmark in India’s growth story. Capital expenditure is expected to rise to push further the infrastructure boom in line with past trends. It is true that the burgeoning middle class has been the backbone of India’s growth story. As they tune into their TV sets or check their notifications on news apps, they would be anticipating relief in the form of tax cut announcements. It has been long since there has been a drastic revision of the tax slabs in the direct taxation system. The government has been facing a challenge to widen the tax base. The current inflation scenario presents a challenge, as tax concessions could provide immediate relief. The GST remains a landmark in the growth story, however it is imperative to further enhance the effectiveness of the taxation system. A set of monetary incentives like concessions on home loans would aid in significantly reducing the financial burden on the middle class. The rapidly increasing direct and indirect tax revenues provide a cushion for the government to undertake certain relief measures for a large section of the population. The government’s intention to push consumption was reflected in approval of the 8th Pay Commission. The budget further presents an opportunity to boost aggregate demand by providing potential financial incentives.
The budget should take measures for further enhancing the productivity in the agricultural sector. India’s march towards sustainable growth elicits additional funding for mechanisms of green growth. The allocations towards renewable energy avenues would be looked at eagerly. It is imperative for the state to continue investments for widening the coverage of social protection schemes for the most vulnerable populations of the country. The government needs to consider enhancing the coverage of social safety nets to include gig workers who constitute a majority of present day labor force. In the aftermath of the pandemic, investments in a resilient public health system has emerged as a top priority. Similarly, enhanced investments in education and specifically in Research & Development could prove to be a gamechanger for the economy in the long-run. MSMEs have emerged as employment generators in the economy. The budget must also try to address the concerns facing the industrial sector. Balancing concerns of multiple stakeholders in the economy remains a tedious challenge for the government. Furthermore, designing the Union Budget is more complex than application of simple textbook economics. It has to take into account the constraints of the domestic political economy and the dynamism of the international stage. The underlying principle of the Union Budget should remain empath for its citizens who are eagerly waiting to tune into the Budget speech.
Pranav Jha holds a Master’s degree in Economics from Jawaharlal Nehru University (JNU).
