New Year, Same Budget
Every year, February is an interesting month for the Indian public. It is the budget season as the government announces its budget for the new fiscal year with the intention to appease the public but also develop the nation. There are multitudes of policies that come along which can be viewed as transformational by some and regressive by some. The intent is always behind catering to the citizens and ensuring that the nation is on a growth track. 2024, being an election year has a different format of budget announcement in February. The budget that was announced last week on 1st February was an interim budget owing to upcoming Lok Sabah elections and a final budget will be presented in July when the new government is formed.
Despite this being an interim budget, it sets the tone for what to expect from the government in the upcoming 12 months. There was no big hurrahs or transformations which were defined by the government, and it soon became the case of just being a new year with the same budget. The election year indicated that there may be some reforms which will help incline the public towards the BJP voter base (which is already strong), but it was more of a status quo. Let’s touch base on what really came along in the budget and how it affects the nation.
1. No tax reforms for the middle class: The ageing Section 80 C still stands at INR 1.50 lakhs despite multiple cycles of inflation. There was a growing call to increase this limit but that does not seem to be on top of the mind of the government. This has been a lingering topic but doesn’t look like being addresses anytime soon. This will not affect the government’s image as the key vote bank is largely unaffected by this.
2. Minor hike in defense budget: the deference budget was hiked by 4.72% with a clear callout for investment in deep technology to increase the technologic prowess of Indian defense forces. While the public may be largely unaffected, but this is an indication of India building a strong base against China and Pakistan in the war smitten world where an attack is imminent on any day.
3. Lakshadweep is back again: With Lakshadweep vs Maldives tourism debate raging up, it found a mention in the budget. The government intends to make investments in setting up infrastructure in the islands with the intent of setting it up as a major tourist destination. The public will be amazed by how the tourism narrative is changing for India, but this will be a major win for the tourism industry in India as more tourists will flock to the nation and Lakshadweep could soon become a cash cow for Indian Tourism industry.
4. Yet another GYAN in budget: The budget promised to focus on 4 top sectors in India, i.e. Gareeb (poor), Youth, Annadata (Farmer) and Nari (Woman). While this is a good acronym, but it also highlights the focus of the government which is towards the key vote bank who will determine the stability of the government. The investment required in these sectors will be high, but it will establish a good vote bank in future and set up India’s image as focused on developmental effort for the people.
All in all, it was a very business as usual budget with no major reforms. India is a growing economy, but the wave of semi recession has not yet arrived in South Asia, and it is something which the government and the finance ministry should be vary of. Building shields against such waves of inflation and de growth is something which should come up in the full budget presented later in July 2024.
