|Topic: GS3 – Indian Economy – Government Budgeting.
This topic is relevant for both Prelims and Mains in the context of understanding the nuances of the budget and its impact on the economy
- Unlike the 2019 budget, which announced significant expenditure schemes, including the PM-KISAN with retrospective effect, the current budget refrains from major announcements.
- The government’s spending priorities exhibit a conservative outlook, contributing to a reduction in the fiscal deficit.
- However, the question remains whether these measures adequately tackle the pressing challenges faced by the Indian economy.
- Despite claims of poverty reduction and economic rebound, the Indian economy grapples with severe rural distress, declining private investment, and employment challenges.
- The data on real wages, particularly in agriculture, underscores the economic hardships faced by workers.
- The reversal of the workforce transformation after 2017-18, with a surge in agricultural employment, signals deeper rural economic troubles.
- The rise in female employment is overshadowed by an increase in self-employment, declining employment quality, and diminishing earnings for women workers.
- The budget’s failure to address the employment challenge, as seen in the increased number of workers returning to agriculture, contributes to declining cultivation income per worker, contradicting promises of doubling farmer incomes.
- The withdrawal of essential spending in crucial sectors like agriculture, rural development, education, and health, amid a struggling rural economy, declining incomes, and looming inflation, exacerbates the challenges faced by the majority of the population.
- Budget estimates for major heads show stagnation or decline in real terms, with a focus on cash transfers and subsidies rather than real investments.
- Despite an increase in government transfers over the last five years, consumption demand has failed to respond, with real incomes remaining lower than 2018-19 levels.
- The sluggish consumption growth poses a concern, and challenges persist in private investment and exports, requiring sustained government support.
- However, the budget’s spending priorities seem more geared towards long-term promises than immediate provisioning.
- The pre-election budget reflects an acceptance of the limitations of public expenditure, evidenced by cutbacks in social welfare spending.
- The neglect of critical sectors like agriculture and rural development is likely to push the rural economy into distress, hindering the revival of overall economic demand and private sector investment.
- Unfortunately, the budget falls short of providing a true reflection of the economy’s state or outlining a comprehensive future governance agenda.
|What is Interim Budget?
|PYQ: One of the intended objectives of Union Budget 2017-18 is to ‘transform, energize and clean India’. Analyse the measures proposed in the Budget 2017-18 to achieve the objective. (250 words/15m) (UPSC CSE (M) GS-3 2017)
|Practice Question: Discuss the implications of the recent pre-election budget on the Indian economy, focusing on its impact on rural distress, declining private investment, and employment challenges. (150 words/10 m)