Budget 2023 — How’s & Why’s Of It
2023 budget of India has been hailed all over, with epithets like the 3 C's —capex, climate, and consolidation. Other alliterations in the press include simple, short, and smiling.
I have read nearly 100 budget articles and a few hundred views in the last 20 days. As a seasoned civil servant, having worked as an additional secretary & financial advisor in six ministries (a few on additional charge), I know the nitty-gritty of governance & budgeting. Hence I have picked 20 highlights, which require careful analysis & regular weekly monitoring, to convert announcements into manifestations.
20 lakh crores of agricultural credit is a laudable objective. But disbursement issues & consequent NPAs & later debt reliefs are live realities. As a result, it is critical to exercise extreme caution in locating viable projects and constructive beneficiaries. The disbursing banks & their arms are located in 7000 blocks of more than 700 districts in India. Govt has to ensure that guidelines are followed in disbursements & are monitored digitally, with district magistrates, taking this evaluation seriously, to oversee this target.
Opening of 157 nursing colleges is a crying need fulfilled by the budget. Why there was strict control on opening such colleges in the past is a mystery to me, when there has always been an acute shortage of nurses, especially since they form a big part of India’s services exports. The health ministry must research & locate these colleges in those hospital premises where infrastructure is available & need is paramount, rather than pander to locational whims & fancies. Also, why limit the number to 157 if private hospitals with infrastructure come forward to start such colleges in this year. We have to cater to demand, not too old mindsets.
National digital library is an idea whose time has come. But it’s a huge task to create such a viable library with all the right & comprehensive content.Best candidate must be chosen to lead this otherwise , it will be a non starter.How digital access will be given to the poor but needy who don’t have smartphones , i pads & laptops , is the biggest challenge. Whether CSC’s in all districts can cater to this need is a question that needs to be handled quickly & effectively.
Aspirational districts numbering 100 odd, have delivered results due to constant monitoring by senior IAS fficers of Goi. Taking on 500 aspirational blocks is a step in the right direction, provided that these blocks are carefully selected in districts other than these 100, so that more districts are covered and a better geographical spread of empowerment in terms of health, nutrition, education, and skill development occurs. If results are to be seen on the round, these blocks must be monitored monthly by 500 directors in Goi.
Another brilliant, but long-overlooked, idea is to focus on PVTGs, or primitive vulnerable tribal groups. According to press reports, there are 75 such groups in 17 states & 2 UTs with a total population of about 28 lakhs. Subsistence living & illiteracy is rampant here. How to reach these tribal groups & provide safe housing, drinking water, sanitation, roads & telecom facilities is a stupendous grassroots challenge , where conscientious staff is required to achieve the desired objectives .Tribal affairs ministry has a tough task & needs to be strengthened with a few carefully selected joint secretaries , who will not let down this worthy cause.
PM Awas Yojana with ₹7500 cr allocation is ostensibly a good provision. But since I was a DC in Arunachal in 1988 , this Yojana continues. In 35 years , 6 lakh villages have not be covered.No time deadlines to finish this work & scheme appears to be in sight.
Implications are clear, and since they are leakages will have to be plugged to reach the propounded milestones in the near future, with close audit of expenditures district-wise.
The biggest announcement was a 10 lakh crore capex allocation which all business leaders felt will have a multiplier effect.Traditional economics suggests that, but there are 3 issues to contend with.
How will you finance this capex without causing inflation. Most important is how will you spend this amount in a year, efficiently and effectively. Few ministries ever reach even 75 per cent of their budgeted allocation, and reallocations in the last quarter are the standard operating procedure. Finally, States are more laggard. Hence large allocation demands large focus on digitally monitoring every ministry and every state and UT, on a fortnightly basis, to encourage optimal fund management. Ministry of expenditure has a difficult task ahead to get this done efficiently & effectively.
50 new airports/helipads is a welcome step but appears to be a tall order to be completed in a year. Quick selection of sites & rapid work by airports authority of India to award contracts is a must. Minister is confident of getting required approvals from defence ministry wherever it is their jurisdiction. Utmost coordination can help to meet this challenge, otherwise several important towns will not see air travel, for some more time to come.
A path-breaking announcement was the removal of 39000 compliances & decriminalisation of 3400 legal provisions. On paper it sounds excellent, but in practice it requires a lot of follow-up to ensure that every implementing authority is aware of this & does not misuse such innovative steps, before an ignorant public. Seminars in all districts must be arranged by the legal departments to bring this to the knowledge of the legal fraternity and the general public. Ignorance will be bliss , if not effectively handled.
Three centres of excellence in artificial intelligence to be located in three institutes is a novel approach, needing proper focus on their location like IIM Bangalore, IIM Ahmedabad & one of the most progressive iits to get maximum mileage. The scope of work must be clear -develop scalable projects in agriculture, health & sustainable cities.
One of the best ideas introduced is to spend ₹7000 cr on e-courts. While e work in Supreme Court & high courts is progressing well, my suggestion is to do decentralised allocation of funds, with ₹ 1 cr in each of the 7000 blocks, so that the cutting edge of justice in the munsiff courts, gets facilitated substantially. A top of the line service provider through a proper tender route, must be found to achieve it within reasonable time-lines.
Lab-grown diamonds, are a rapidly growing commodity about which I wrote in my book
100 ideas to improve governance in India in 2019. Well spent, this can become a great import substitution mechanism & ultimately a large export item. Instead of doing R&D in its, where there r no entrepreneurs with an understanding of diamonds.
I suggest a PLI kind of assistance to the dozen-odd producers of such diamonds in India, so that through installation of the required instrumentation & facilities, production of lab-grown diamonds multiplies. India can then beat China at this game & becomes a world leader.
National green hydrogen mission is a very big announcement with the purpose of reaching low carbon intensity.But in a country like India where drinking water is available at a premium, finding the copious quantities of water to make it a success , needs to be thought through. Concurrently the costs of generating hydrogen also needs to be carefully worked out lest it becomes an expensive proposition later.
Renewable energy evacuation from Ladakh spending ₹20700 Cr, again is a huge announcement, which requires detailed project reports and attention to minute logistics details .13gw is a big target & MNRE needs to have the best of minds to accomplish this, due to inhospitable terrain & difficult working conditions.
One of the best budget ideas is to provide stipend to 47 lakh youth under the apprenticeship programme outlined.This can be a big game changer in skill development & providing the right manpower for the private sector, especially the MSMEs. Kudos to the FM on this massive initiative.
Senior citizens as they grow older, need maximum hand-holding. While FDlimits with higher rates have been doubled to ₹30 lakhs for them, which will provide some relief, it must be raised to 50 L by next year so that superannuation benefits can get viable returns for the ageing population. Also, govt have to seriously think of tax exemption on pensions, because a pension is not an income but a living subsidy, to sustain the old as their body parts get weaker, & living becomes more expensive with additional manpower support required 24x7.
Income tax rate slab consolidation is a misnomer I feel. Govt defines economically weaker sections with income less than 7 lakh, then how can income tax slabs start at 3lakhs even in the old regime.
All tax slabs are hitting are fixed income brackets where TDC happens & full tax is paid. Beyond ₹15 lakhs is where the
Traders, diamond merchants, lawyers doctors, stock brokers, and real estate agents come in, happily evading/avoiding the tax burden. The best example is Chandni Chowk the biggest wholesale market in Asia with a daily turnover of ₹ 1lakh crore. Pittance is collected as income tax or GST from there. Why?
While reducing the surcharge is a good idea, letting the big-fish swim-off, is not.
Hence real consolidation will happen when the lower middle class up to 1 lakh rs a month inome, gets real relief, to be compensated by the rich paying their 30% tax rate diligently & regularly & swelling the tax kitty.
Disinvestment figures are realistic and pushing them hard, only driving down their share prices. Only the real loss-making burdens like state trading corporation should be sold off & for the rest, share sale judiciously done, is a better option to get maximum revenues. Hotels are another area where govt has no expertise & slowly should get disinvested at the right price, keeping their asset value in mind. State governments must also take a lead & disinvest real loss-making units, rather than putting good money after bad money, year after year.
Global headwinds & likely depression in EU, and 80 countries seeking debt relief, can boomerang into an inflationary spiral. Budget is silent on this despite the fact that it can hit our balance of payments, as hinted in the economic survey. This needs deliberation in parliament & appropriate action thereafter.
Finally, each budget is a bundle of announcements. How many announcements have been accomplished each year is not known, as there is no action taken report on the previous budget, placed in parliament. If this is made mandatory with facts and figures, budget making & its execution will automatically get professionalized, and populism will end. To my mind, this is the most significant innovation required to ensure taxpayers' money is well spent.
And as they say Well begun is half done.
The author is IAS retd
