Udayan Hazarika
(The writer can be reached at udayanhazarika@hotmail.com)
The full budget for the financial year 2024–25 has been presented in the Lok Sabha on July 23, 2024. The budget appears to have indicated a shortage of funds to the tune of Rs 5.80 lakh crore in the revenue account. In the interim budget presented in February, the total revenue receipt was fixed at Rs 30.01 lakh crore. This has been enhanced now to Rs 31.29 lakh crore, which is 14.70 percent more than the revised amount of revenue receipt (Rs 27.28 lakh crore) fixed for last year (2023–24). Even this amount appears to fall short of the requirement considering the huge series of schemes taken up in the budget. Of this amount of Rs 31.29 lakh crore, Rs 25.83 lakh crore will come from central taxes, and Rs 5.46 lakh crore will come from non-tax revenues. On the capital account side, a total of Rs 28,000 crore will come from the recovery of loans, and Rs 50,000 crore will come from other recoveries. To meet the total expenditure figure of Rs 48.21 lakh crore, there is a shortfall of Rs 16.13 lakh crore, which the Finance Minister (FM) proposed to borrow from various sources.
On the expenditure front, as stated above, total expenditure has been proposed at Rs 48.21 lakh crore, of which Rs 37.09 lakh crore will be for revenue expenditure while the remaining Rs 11.11 lakh crore is meant for capital expenditure. Of the total revenue expenditure, Rs 11.63 lakh crore will go towards the payment of interest on the outstanding loans. Thus, of the total revenue expenditure, as much as 31.36 percent will go towards interest payments. On the other hand, to encourage the States to increase their capital expenditure, 50-year’ interest-free soft loans are provided to the States. The amount will come from the revenue account, which will be to the tune of Rs 3.91 lakh crore. Thus, total revenue deficits will come to Rs. 5.8 lakh crore (Rs. 37.09–31.29 lakh crore). The Centre has stressed the need to enhance capital expenditure in the States. The amount of capital expenditure as proposed in the budget was of the same size as that of the interim budget. To be added to this will be the loan amount to be provided to the States for capital expenditure, i.e., Rs 3.91 lakh crore. Thus, total effective capital expenditure will come to Rs 15.02 lakh crore.
Of the total borrowing of Rs 16.13 lakh crore, as proposed by the FM, Rs 11.75 lakh crore, or almost 70 percent of the total, will come from market borrowing; Rs 50,000 crore will come through Treasury Bills; and Rs 4.66 lakh crore will come from small savings. The government is already overburdened with a loan amount of more than Rs 156 lakh crore as of last year. The amount has increased by now and will further increase in the current year. With this amount of borrowing, the government proposes to keep the fiscal deficit target at 4.9 percent of GDP, as opposed to the 5.1 percent proposed last year. But considering the fact that the amount proposed for total expenditure for the current year is only 6.15 percent more than the last year’s revised target, it will not be possible to meet all the expenditure targets proposed in the current year’s budget. This will necessitate further borrowing, leading to further enhancement of fiscal deficits.
Of the total expenditure of Rs 48.21 lakh crore, Rs 15.16 lakh crore is meant for the implementation of central sector schemes; Rs 14.90 lakh crore is for meeting various central expanses; Rs 5.06 lakh crore is for various centrally sponsored schemes; and Rs 1.32 lakh crore is kept for the 15th FC recommendations. Apart from this, Rs 7.84 lakh crore is kept for the establishment expenditure of the Central Government.
The government has used the GDP for the current year as Rs 326.36 lakh crore while working out various macroeconomic features such as fiscal deficit, primary deficit, etc. This figure has been worked out, giving a 10.5 percent increment on the worked-out figure for the years 2023–24, which was Rs 295.36 lakh crore, which again was a figure worked out on the basis of the provisional GDP figure for 2022–23. Giving more than 10.5 percent growth rate in each case in a consecutive three-year’ period will undoubtedly inflate the budgetary targets.
The budget 2024–25 is an effort on the part of the government to look into the crucial issues of both social and economic value under the broad umbrella mantra of Bikshit Bharat. It has identified four socio-economic categories of people, viz., farmers, poor, women, and youths, as waiting for their uplift. Accordingly, various schemes have been formulated to suit nine areas of the economy. Thus, all the schemes are brought in line with any of these nine ministries or departments. The budget has only outlined the schemes, and further analysis and fitting each against the ground realities will take time. Since already four months of the current fiscal have elapsed and only eight months are in hand, it may not be possible for the government to work out all the schemes and make them ready for takeoff.
This year, it appears that the government has removed the categorization of various central government schemes. Earlier, these schemes were categorized according to their importance as the core of the core schemes, or core schemes, or central sector schemes. But this year, all these schemes are categorized only into two categories: i) centrally sponsored schemes, which are shared schemes between the centre and state, and ii) central sector schemes. The majority of the schemes have received more allocations of funds, except for a few. For example, there has been a drastic cut in the outlay allocated for the smart city mission from Rs 8,000 crore to Rs 2,400 crore; allocations for the Jal Jiwan Mission and the Swatch Bharat Mission were marginally raised from Rs 70,000 crore to Rs 70,163 crore and Rs 7,000 crore to Rs 7,192 crore, respectively. The allocation for NSAP has been kept at the same level as that of the last year, at Rs 9,652 crore. Similarly, MNREGA allocation was also kept at the level of last year’s, i.e., Rs 86,000 crore. Allocations for crop insurance have been reduced from last year’s 15,000 crore to Rs 14,600 crore, etc.
This reflects the political wisdom of the government, as it adequately awarded their coalition partners in response to their various demands. Bihar has been given projects worth Rs 58,900 crore, of which Rs 26,000 crore will be for road projects, Rs 21,400 crore for a 2400 MW power plant, and Rs 11,500 crore for flood control. Projects. Similarly, Andhra Pradesh has also been allocated an amount of Rs 15,000 crore for Andhra Pradesh Mega Projects, which includes 11 major infrastructure projects. The budget also has good news for middle-income-earning families who will pay less income tax next year as the income tax ceiling limit has been raised and the tax slab has been rationalized.