BUDGET & BEYOND

BUDGET & BEYOND

On the first of February 2023, the union finance minister of India presented the budget to the Parliament. The budget presentation shifted from evening 5 PM to 11 AM to wipe out the Raj hangover. For some, the late evening budget was a reason to celebrate as the party could continue till the night. It is hard for most experts to interpret the budget on the day; thus, one can pardon an ordinary man. Most individuals understand very little of what is being spoken. In the end, all that one remembers after the speech is what commodities have become dearer and what has become cheaper. The common person gives a thumbs up or down based on whether he has been taxed more or less. Budget speeches indicate bonhomie or lack of it between the treasury benches and the opposition. In olden times there was humour and laughter in the Parliament during budget presentations. This article intends to understand the problematic side of the Union budget presented and share some lighter moments over the years which have now become folklore. (Note that the numbers given by the side relate to the 2023-24 Budget Estimate) 

 In simple language, a budget is a statement of expenditures and receipts. To balance the budget, the housewife spends only as much as she receives from her husband and other sources. Because if she spends more, she will land up in debt, which can cause her pain. But for sovereigns, debt is an essential component. Expenditure: (INR 45.03 Lakh crores), always surpasses receipts: (27.16 Lakh Crores INR). The lower the percentage of this debt, the better the economy's state. This debt is commonly known as the fiscal deficit: (17.87 Lakh Crores INR). This year the fiscal deficit is aimed at 5.9%. In the last budget, it was 6.4% of the GDP. So how does the government get the money it spends? First from receipts and second from borrowings. Receipts come from taxes and duties levied by the central government on individuals, corporates, and the import/export of goods and services. The deficit is covered by borrowings (17.02 lakh crores INR). Sovereigns borrow from domestic and foreign institutions. It is better to borrow from domestic institutions as their return does not involve the necessity of return in precious foreign exchange. Nations which are poor and not doing well have to borrow from international institutions like the IMF. Such borrowings come at a steep cost. 

The government is always sensitive about increasing its receipts. The budget provisions involving fiscal measures aim to increase receipts by improving economic activity. Increased demand leads to higher consumption, which leads to more revenue, thus, more earnings for the government through taxes. Therefore the two sides of economics, Supply and Demand, are the essential concern of the government. Without increased demand, there would be no increase in supply. Incentives to the industry are to facilitate higher supply. And rationalising taxation aims to provide more spending power to the public and businesses. Higher disposable incomes are expected to lead to more consumption and, thus, higher demand. Therefore the budget is a delicate balance between how to increase demand yet at the same time ensure smoother supply. The government gains at both ends of this see-saw, and thus its receipts rise to match its expenditure. 

Two sectors dominate the government's attention, manufacturing and agriculture. These two are the main wheels of the economic chariot. It would thus be seen that a balanced budget tries to ease manufacturing processes and increase agriculture yields. In developed economies, there is also a third sector which changes the character of the economic vehicle. It is the Goods & Services sector, e.g. Tourism, Mobile networks. Currently, it contributes the maximum to India’s GDP. Its contribution stands at 47.5 % against manufacturing which is chugging at 26%, and agriculture at 17% in 2021. Between these three, the government earns the maximum revenue. 

The recent budget saw a multitude of slogans and titles: Amrtikal, Saptarishi, Vishkarma, Awaas Yojna, Shree Anna etc. All these are fancy titles to schemes run to garner better economic activity based on the current domestic and international environment. Green energy is in tune with the Prime Minister's commitment to the world to make India a net zero-carbon emission country by 2070. An outlay of INR 19700 crores, already made under the Green Hydrogen mission, coupled with this year's budget outlay of INR 35000 crores, will facilitate the transition to a net zero carbon emission economy. 

A budget is also a political statement. ‘Sabka saath Sabka vikas’. Such slogans are catchy and tell the people that the government is keen on economic prosperity in every section of society. Thus schemes for the tribal-like the 'Pradhan Mantri PVTG Development Mission' (INR 15000 crores), are allotted to provide safe housing, clean drinking water, sanitation and improved access to education and health opportunities. The PM Awas Vikas yojana makes housing affordable for all. These measures come from tax cuts in indirect and direct taxes.

The most crucial segment in the budget speech is always the part in which the Finance Minister proposes the tax structure for individuals and corporates. The FM has made revolutionary changes in personal tax structures in this budget. Income up to 7 lakh Rupees would be exempt from paying any income tax. It means anyone who draws a salary, including incentives up to 58 thousand INR a month, would remain tax-free. The tax structure introduced last year has become the default tax structure with some modifications. The slabs have been reduced in number (Five) and amount of tax. Thus most of the salaried class will benefit from the new revised rates. While the government loses INR 35000 Crores due to this revision, it hopes that the excess income in the hands of the public would increase consumption, thus fuelling demand and growth.

The budget speech is the essence of the budget proposals document, is far longer, and carries much of the fine print. The budget document also contains the Finance bill. A finance bill is the changes which are recommended to the taxation structure by the FM. The budget document is tabled in Parliament. It starts the process of a series of debates in which each provision is voted for to become a part of the finance or money bill. 

The budget speech, sometimes drab and monotonous, does have its moments of fun and poetry. A slip of the tongue by FM in the recent budget speech when she said "to replace old political vehicles' instead of old polluting vehicles drew loud shouts from the opposition benches. The FM minister quickly corrected herself and made a tongue-in-cheek remark at the opposition: 'replacing old political vehicles is also necessary', which drew laughter. Over the years, the finance ministers have indulged in poetry and Sher-Shayari to lighten the otherwise heavy sessions. To quote a few interesting ones:

· In the 2003 budget speech Jaswant Singh the then FM, said, "Income tax is the most difficult thing upon earth to understand", echoing the sentiment expressed at the beginning of this article.

· In 2011, Mamta Banerjee got cheeky in her Rail budget speech. She quoted: "Hum aah bhi bharte hain to ho jate hain badnaam, wo qatl bhi karte hain to charcha nahi hoti. (If I sigh, it becomes a scandal, and even when she kills someone, no one seems to take notice)

· Mr Pranab Mukherjee was a master at wit and a sense of humour. His speeches were always laced with both these. In 2010 he remarked: "I fear that my proposal to increase customs duty on gold and silver could "dent my popularity with women...I propose to salvage this by fully exempting branded jewellery from excise duty."

· In the 2012 budget speech, Mr Pranab Mukherjee made a witty remark on Hindu gods: "While, like last year, I seek the blessings of Lord Indra to bestow on us timely and bountiful monsoons, I would pray to Goddess Lakshmi as well. I think it is a good strategy to diversify one's risks."

· Mr Pranab Mukhrjee, in his 2012 budget speech, made the wittiest remark to date: "I must be cruel to be Kind".

· With the regime change, the wit died down, and Shayari and double meaning took precedence. In the 2015 union budget Shri Arun Jaitley, on presenting the first budget of the NDA Government, took a potshot at the earlier government by quoting a verse: 

"Kuchh toh phool khilaye hamne

Aur kuchh phool khilane hain,

Mushkil yeh hai bag mein ab tak,

Kaante kai purane hain”.

(Meaning, some flowers have bloomed in our time, and some are still to bloom. The difficulty is that the garden still has many old thorns which have yet not been removed.)

· With Nirmala Sithraman taking the reins of the finance ministry in 2018, budget speeches became more serious, laced with famous words from South Indian and Urdu Poets. In 2020 the first budget after the abrogation of article 370, she recited a verse from a poem written by Kashmiri poet and Sahitya Akademi winner Pandit Dina Nath Kaul. The poem refers to Shalimar Bagh and Dal Lake in Kashmir, emphasising that India belongs to all citizens.

Humara watan khilte hue Shalimar bagh, 

jaise humara watan Dal lake mein khilte hue kamal jaisa,

nau jawanon ke garam khoon jaisa, 

mera watan tera watan, humara watan ,

duniya ka sabse pyara watan."

(Translation: Our country is like a blooming Shalimar Bagh, our country is like the lotus blooming in the Dal Lake; it is like the boiling blood of the youth, my country, your country, the world's most beloved country.)

· Last year (2022), during the Pandemic times, Nirmala Sitharaman quoted legendary poet Rabindranath Tagore at the start of her Budget speech. She quoted him emphasising India's continuing fight against the Covid-19 pandemic. Here's the quote: "Faith is the bird that feels the light and sings when the dawn is still dark.

(From 'Fireflies: A Collection of Proverbs, Aphorisms and Maxims' by Rabindranath Tagore)

· The most telling quote came from Mr Manmohan Singh, the former Prime Minister when India had to surrender its gold to the Bank of England. In his landmark 1990 Budget speech, where several economic reforms kick-started, the then Finance quoted: Allama Iqbal,

"Yunaan-o-Misr-o-Rom sab mit gaye jahaan se,

Ab tak magar hai baaki, naam-o-nishaan hamara" 

(Translation: Old civilisations of Greece, Egypt and Rome have vanished from the earth. But our civilisation continues to thrive.)

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