Union Budget may steer clear of populism

Just 24 hours are left for the presentation of the Union Budget which would be the last full budget before elections. Cooking is over and the halwa is being packed in the budget documents and will be served in Parliament on Tuesday. India is awaiting the moment with bated breath. The business and financial circles wonder whether the Finance Minister Nirmala Seetharaman will strike a fine balance between populist and pragmatic measures. They are hoping against hope that the budget would take into consideration issues such as rising inflation and layoffs because of the looming global economic slowdown. They fondly hope that the budget will take steps to fend off the global crisis.

Some particularly the opposition feel the Centre may announce some revadis with fancy names. With nine state elections likely this year, the BJP cadre too is looking for populist schemes. But a majority feel that with Modi opposed to Revadis will not allow that. Another reason is even if the government goes for any populist freebies, by the time Lok Sabha elections are held next year people will forget them.

Ordinary voters tend to take into account only taxation or sectoral allocations and not the full impact of inflation. As such, the Finance Minister could resort to what the economists call money illusion while presenting the budget. Since inflation has gone up, the possibility of increasing PM Kisan scheme from present Rs 6,000 to Rs 7,000 is not being ruled out. This could put pressure on states like Telangana and Odisha also to follow suit when they present the state budget later this month. At present, Telangana offers Rs 5,000 per acre under Rythu Bandhu scheme (not applicable to tenant farmers) while Odisha offers Rs 4,000 per acre even to tenant farmers.

Nirmala Sitharaman, industry circles feel, may announce steps to further strengthen the start-up ecosystem in the country and address inverted duty issues in certain sectors to promote domestic manufacturing. The government has prioritised the start-up sector and introduced several measures in the last few years. Fiscal incentives under the production linked incentive (PLI) scheme to some more sectors are also likely.

The taxpayers, particularly the salaried class, are pinning high hopes on the budget that Sitharaman would announce changes in tax slabs to benefit the common man who has been unduly burdened by GST, steep hike in petrol prices and the cascading effect it had on all essential commodities. Tax experts say that there is a possibility of some changes in the basic exemption limit. One thing is certain. If the FM looks for populist budget, then it will not be possible to stick to the fiscal deficit target. What some experts suggest is that she should focus on building assets for farmers and where the post-harvest losses are higher, especially in case of the perishable produce. She should come up with measures to make agriculture viable by using Market Intelligence and Analytics. The Modi government is working on increasing the railway budget by 20-25 per cent to strengthen the infrastructure of the entire railway system. Expectations are that there will be increase in the allocation of nearly Rs 1.8 lakh crore for this sector in 2023-24. In 2022-23, the allocation was Rs 1.4 lakh crore. The focus may be on introducing more Vande Bharat trains.