2 February 2024 : The Hindu Editorial Notes PDF
The Hindu Editorial
2-February-2024
1. Interim Budget 2024 — in campaign mode.
| Topic: GS3 – Indian Economy – Government Budgeting. UPSC candidates need to understand the Interim Budget analysis for 2024-25, assessing fiscal management, welfare schemes, and political implications for comprehensive exam preparation. |
| Context |
|
Additional information on this news:
Introduction: Focus on Interim Budget for 2024-25
- Indications prior to Finance Minister Nirmala Sitharaman’s presentation hinted at a focus on the Interim Budget for 2024-25.
- Prime Minister Narendra Modi clarified that an interim budget is presented when polls are close, expressing confidence in a victory and promising a full budget post-election.
Interim Economic Survey: “Transformative Growth” Eulogy
- An ‘interim Economic Survey’ highlighted post-Independence economic development, particularly during the 2014-24 decade as “transformative growth.”
- The survey, reflecting an electioneering tone, credited the Modi government for significant progress, contrasting it with earlier periods of growth.
Budget Speech: Vocal Expression of Government’s Achievements
- Part A of the Budget speech focused on welfare schemes, attributing them largely to Prime Minister Modi, despite his past dismissals of similar schemes implemented by non-BJP State governments.
- Part B declared a commitment to fiscal consolidation while increasing spending on infrastructure and welfare.
Analysis of Fiscal Performance: CGA Data Insights
- Assessing the fiscal performance for 2023-24 is challenging due to the February 1 budget presentation and revised estimates incorporating projections until March 31.
- Controller General of Accounts (CGA) data reveals significant deviations between budgeted and revised expenditures in crucial areas.
MGNREGA Spending Discrepancy:
- Despite claims of inadequate funding, the revised estimate for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2023-24 is lower than the budgeted amount.
- The CGA reports a deviation between estimated and actual expenditures, with a substantial portion projected for the last quarter of the financial year.
PM-KISAN Scheme Spending Discrepancy:
- The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme’s actual spending till December is considerably lower than the revised estimate for the entire year.
- Similar to MGNREGA, there is a possibility of pre-election spending to influence voters in favor of the BJP.
Interpretation of Spending Deviations:
- Deviations between actual spending till December and revised estimates raise questions about the government’s allocation claims.
- Possible interpretations include inflated revised estimates for political messaging or a planned pre-election spending blitz.
Food Subsidy and National Food Security Act:
- Despite claims of expanding food support, the total food subsidy has decreased from ₹5,41,330 crore in 2020-21 to ₹2,87,194 crore (projected) in 2023-24.
Macroeconomic Level Analysis:
- The Budget claims to almost meet receipts other than borrowing, attributing it to meeting expectations in tax and non-tax revenues.
- Hefty increase in non-tax revenue attributed to a rise in income from dividends and profits, mainly from transfers from the Reserve Bank of India.
Fiscal Deficit Management:
- The Finance Minister claims to marginally keep the fiscal deficit at 5.8% of GDP below the budgeted level while ensuring total expenditure in line with the budget.
Conclusion: Political and Economic Implications
- While the government emphasizes fiscal prudence, the impact on voters and the electoral outcome remains uncertain.
- The Budget reflects a mix of political messaging and economic management, with potential implications for the upcoming elections.
| PYQ: The public expenditure management is a challenge to the government of India in the context of budget-making during the post-liberalization period. Clarify it. (UPSC CSE (M) GS-3 2019) (250 words/15m) |
| Practice Question: Discuss the fiscal management, welfare scheme allocations, and potential political ramifications highlighted in the analysis of India’s Interim Budget 2024-25. |
2. A case of capex under the ‘macroscope’
|
Topic: GS3 – Indian Economy – Government Budgeting. Critical for UPSC: Analyzing India’s post-COVID economic recovery, fiscal policies, and record-high public capital expenditure in the FY25 Interim Budget. |
| Context |
|
Additional information on this news:
India’s Economic Recovery Post-COVID-19:
- Notable recovery marked by robust exports and domestic investments.
- Exports benefited from global supply chain ease and a surge in services exports.
- Domestic investments driven by the government’s focused capital expenditure (capex) push.
Improved Investment Ratio:
- National Statistical Office estimates India’s investment ratio at 29.8% of GDP in 2023-24, a significant improvement from the 2020-21 low of 27.3%.
- Ranks fourth best in G-20 countries for the investment ratio improvement post-COVID-19.
Record High Capex in FY25 Interim Budget:
- FY25 Interim Budget emphasizes public capex, setting a record high at ₹11.11 trillion, comprising 4% of GDP and 23.3% of total expenditure.
- Notable two-thirds allocated to economic services, focusing on hard infrastructure sectors like roads and railways.
PM Gati Shakti Program:
- Introduction of PM Gati Shakti program identifies economic rail corridors to enhance logistics efficiency.
- Focus areas include energy, mineral, and cement corridors, port connectivity corridors, and upgrading 40,000 rail bogies to Vande Bharat standards.
Record High Defence Capex:
- Atmanirbhar Bharat campaign prioritizes defence capex, allocating ₹1.72 trillion, reaching 0.5% of GDP in FY25.
- Launch of a new scheme for deep-tech technologies in defence to expedite self-reliance.
Loans and Advances for Capex Creation:
- Loans and advances increase to ₹1.71 trillion in FY25, facilitating State participation in ground-level capex creation.
- States contribute significantly to general government capex, holding a 44% share as of December 23.
Inclusive Agenda Integration:
- Despite a focus on hard infrastructure, FY25 Budget addresses the housing sector and aims to include two crore additional houses in the next five years.
- Emphasis on green energy ambitions, providing one crore households with 300 units of free electricity monthly through rooftop solarisation.
Challenges in PSE Capex:
- Public sector enterprises (PSEs) experience a slowdown in capex spending, with a reduction from ₹4.88 trillion to ₹3.26 trillion in FY24.
- Modest growth projected in PSE capex to ₹3.43 trillion in FY25, with a ratio to GDP at 1.0%, the lowest in recent history.
Fiscal Consolidation and G-Sec Borrowing:
- High point of the budget is fiscal consolidation, with FY25 Interim Budget targeting a fiscal deficit at 5.1% of GDP, below consensus expectations.
- Gross government security (g-sec) borrowing expected to moderate to a three-year low of ₹14.13 trillion, potentially benefiting the private sector.
Private Sector and Collateral Benefits:
- Fiscal rectitude and conservatism in the budget may lead to better availability of lendable resources for the private sector.
- Expected collateral benefits include potential lower rates and positive impacts on the overall economy.
Conclusion:
- In conclusion, India’s post-COVID recovery, emphasized by robust exports and domestic investments, coupled with the FY25 Interim Budget’s record public capital expenditure, signifies a pivotal moment for sustainable development and economic resilience.
| What Is Capital Expenditure And Why It Is Important? |
|
● Definition: Capital expenditure (CapEx) refers to the funds a company invests in acquiring, upgrading, or maintaining physical assets such as buildings, machinery, or equipment with the expectation of long-term benefits. Importance:
|
|
PYQ: Distinguish between capital budget and revenue budget. Explain the components of both these Budgets. (150 words/10m) (UPSC CSE (M) GS-3 2021) |
| Practice Question: Examine the role of India’s post-COVID economic recovery, fiscal policies, and record public capital expenditure in the FY25 Interim Budget for sustainable development. Discuss. (250 words/15m) |
For Enquiry
2 Feb 2024 : Daily Current Affairs
2 Feb 2024 : Indian Express Editorial Analysis
2 February 2024 : PIB Summary for UPSC
2 February 2024 : The Hindu Editorial Notes PDF
The Emergence of Gandhi- UPSC Notes
Home Rule Movement- UPSC Notes
1 Feb 2024 : Daily Current Affairs Quiz
Socio Religious Reform Movements- Before 1857
1 Feb 2024 : Daily Answer Writing
1 Feb 2024 : Daily Current Affairs
Daily Current Affairs 2 Feb 2024 : Daily Current Affairs Daily Current Affairs
2-February-2024
1. US State Department Approves $4 Billion Sale of Armed Drones…
Indian Express 2 Feb 2024 : Indian Express Editorial Analysis Indian Express Editorial Analysis
2-February-2023
1. Stability over political gestures
Topic: GS3…
feb 2024 PIB 2 February 2024 : PIB Summary for UPSC PIB Summary for UPSC
2-February -2024
1. Rajya Sabha Chairman, Shri Jagdeep Dhankhar reconstituted the…
Feb 2024 The Hindu 2 February 2024 : The Hindu Editorial Notes PDF The Hindu Editorial
2-February-2024
1. Interim Budget 2024 — in campaign mode.
Topic: GS3 – Indian…
Modern India The Emergence of Gandhi- UPSC Notes The Emergence of Gandhi
The emergence of Gandhi in the Indian National movement is known for the beginning…
Modern India Home Rule Movement- UPSC Notes Home Rule Movement
The Home Rule movement in India started in the background of the ongoing world war…
Daily Quiz 1 Feb 2024 : Daily Current Affairs Quiz 1 Feb 2024 : Daily Quiz…
Modern India Socio Religious Reform Movements- Before 1857 Socio Religious Reform Movements
The colonization of India by the British during the 18th and 19th centuries…
mains answer writing 1 Feb 2024 : Daily Answer Writing Mains Answer Writing
1-February-2024
Q1) Explain the origin and evolution of the Himalayan Mountain…
Daily Current Affairs 1 Feb 2024 : Daily Current Affairs Daily Current Affairs
1-February-2024
1. Justice P.S. Dinesh Kumar appointed Chief Justice of Karnataka…
