Union Budget 2023: Views from GIM Community
The first Budget in Amrit Kaal – Budget for 2023-24 was presented on 1 Feb 2023. We have asked Goa Institute of Management faculty and staff to share their views on the budget. We will share their views in two parts. The first part of the article is based on the individual’s views about the budget.
Prof. Ajit Parulekar, Director, GIM shared that “This is an expected pre-election year budget. The income tax relief through years revision of tax slabs should see an increase in takers of the new tax regime.
The good news is the continued strong push on infrastructure - road, rail, air included.
The disappointment is the marginal increase in education and health care budgets - health care spending being about half of the long-promised 4% of GDP. Overall a progressive developmental budget”.
Prof. Shelly Pandey, Chairperson- Centre For Leadership at GIM shared that “As a gender expert let me share the gender analysis of the Union Budget 2023. The budget focused on women empowerment for women belonging to different economic backgrounds. By focusing on financial independence of rural women, the budget promises to provide not only the variety of raw material but also the branding and marketing to the products of women self-help groups (SHGs). This will be a great boost to their economic empowerment. This economic empowerment will have a direct impact on the health and nutrition of rural women.
In addition to this, financial assistance of more than Rs 2.25 lakh crore has been provided to small farmers under PM-Kisan Samman Nidhi. About three crore women farmers have been provided Rs 54,000 crore under the scheme,
On the other hand, to encourage investments on women’s and girl’s names, the budget has also introduced a scheme called Mahilla Samman Saving Certificate at the interest rate of 7.5 % available till March 2025. It is expected to increase the investment on women’s name in the next two years.
The middle- class salaried men and women, earning up to 7 lakhs would remain out of any tax slab, which adds to their annual savings to a certain extent.
Overall, the budget has tried to empower women from different economic strata, with a vision to create larger pool of investment on their names for the future.”
Prof. Amiya Sahu, Finance Professor expressed that “I will be a little critical of the budget, unlike most! The government’s focus has still remained on ‘hard-infrastructure’ viz. roads, ports, airports, etc. than the much-needed ‘soft-infrastructure’ i.e. education and healthcare! The numbers say it all on this again in this Budget 2023-24, as was in the last 2022-23. The road ministry gets a 36% hike in budget allocation while healthcare and education get much less! The amount allocated to roads is INR 2.7 lakh crores. For healthcare, the amount allotted is INR 89 thousand crores which is an increase of about 13 percent. The amount allocated to education is about INR 55 thousand crores with an increase of only about 8 percent.
My personal view has been, “we need to prioritize health and education, over other important things”. I hope the government will change its priorities next year”
Prof. DN Venkatesh, Dean (Academics) shared that “Among other positive things presented in the budget there was strategic approach toward building tech capability of India. The 5G centers, about 100 of them across, will give a big spin to leveraging 35G for national development. India has achieved several advancements in technology space, and there is so much to achieve. If we were to look at the telecom revolution India has been a laggard in relation to countries like USA, China and South Korea. We have so far focused on 5G rollout, and the data is used largely for entertainment than for any other productive use. The telecom players and entertainment players are reaping the benefits.
The reality is that India can leapfrog on development through RnD in areas like agriculture, education, healthcare, financial inclusion, and the list goes on”.
Prof. Divya Singhal, Chairperson- Centre For Social Sensitivity and Action at GIM communicated that “From a responsibility and sustainability point of view, there are some new announcements in the budget that will help facilitate India’s commitment to net-zero carbon emission by 2070. I find it interesting to know about the Green Credit Programme that will incentivize companies, individuals and local bodies to implement environmentally sustainable and responsive actions. The Green Credit Programme as a concept looks attractive but from the execution point of view, I see many challenges. Who will implement this programme? What will be considered as responsible actions? And how the monitoring will happen in the case of individuals? More details are required to know about the feasibility of implementation.
There are some other announcements like setting up bio-input resources centres to facilitate farmers to adopt natural farming and programmes to promote alternative fertilizers etc are a good step.
It is essential to inculcate reading habits among children and adolescents. I like the concept of the National Digital Library for children and adolescents announced in the 2023 budget. I also like the announcement that states will be encouraged to set up physical libraries for children and adolescents at panchayat and ward levels. But how much budget is allocated to this is not clear. I wanted to see more emphasis on education in the budget”.
Prof. Sebastian Morris, Chairperson – Centre For Public Policy at GIM shared that “The budget moves in the direction of fiscal consolidation and has been driven by the objective of bringing down the fiscal deficit to a level below 6% (5.9%). This is most likely to be achieved. However, growth would be around 6.5%, marginally lower than in the year 2022-23. While this is considered as good given the current global environment, India is in a transformative phase, and should have been aiming for much higher growth. The growth in public capital expenditures is of the order of 26% and this too would be achieved if the past trends are any indication. Revenue expenditures excluding interest would actually fall by 3.9%. If one computes the fiscal impetus in the budget assuming twice the impact for capital expenditures in comparison to revenue, then it is at the rate of 11%, while in 2022-23 it was 12.9%. Similarly, the outlay on MGMREGS has been kept at Rs 60,000 crore which is a reduction over the previous COVID years. This is at a time when employment has still to recover. Social expenditures are also slated to grow slower than GDP. Thus, the impetus from the fiscal side is likely to be negative to the growth of 6.5%.
The quality of public capital expenditures is also sound since much of it is on transportation – railways and roads. In the latter sound PPP, and EPC models with a capable organisation allow for value creating investments. In railways too there are the beginnings of an overall strategy of increasing investments. But the programme is driven by the diktats of the Minister rather than institutionally. Marginal privatisation measures may prove difficult and much of the participation would not move beyond brownfield “investments”. Reform in the organisation of the railways should have taken place. The scope to recast the organisation of the railways to give a performance and competitive orientation has been missed. Railways as yet do not have the pricing freedom to compete with air, bus and truck to get back the demand. Yet there is little realisation on the need for their autonomy”.
He further communicated to us that “there is hardly any increase in the outlay on urban infrastructure. The government realises the need for further study since almost everything in the governance of urban areas and in the planning over space is problematic. The SMART Cities programme with it clutch of projects was unconnected, and bypassed cities’ core problems to lose itself on “demonstration” , little of which was scalable or possible under the current dysfunctional governance systems.
It is a matter of utmost concern that private investment spending which has been a low level since 2012-13 is likely to continue without an acceleration. There are no new measures to help private investment other than PLI, and the promise of governance “improvements”. Overall gross capital formation rate remains modest at under 30% and unless private investment rises this is unlikely to go up despite the significant push in public capital expenditures. Employment too which is intimately liked to rapid growth and private investments is unlikely to improve, and the backlog of COVID losses is still 3 million and is unlikely to be made up entirely over the next year. Consumer demand is iffy and would not increase unless employment rises rapidly. Global demand is likely to be muted in most views, but it may still surprise positively, if there is a faster reduction of US inflation.
Some of the long overdue measures in correcting tariff inversions have taken place in electronics. But there is no strategic thrust here. There are almost no measures to help the beleaguered small sector other than credit enhancement measures, which are unlikely to work since the shift from informal to formal is structural. While this may not bother consumers, it does not auger will for employment growth unless, overall growth of manufacturing can be pushed above 10%. But the coordinated strategies for the same, with the appropriate macroeconomic stances are missing. Slow growth of manufacturing goes hand in hand with stagnation in the share of private investments in overall GDP. And the reality of “very high uncertainties” with regard to the working of government despite claims to the contrary, the fickleness in policy, the emotive drive to green, the rising violations from rule of law, keep private capital spending down”.
Prof. Devasheesh Mathur, Faculty in the Health Care Management shared that “With Ayushmann Bharat, India has embarked on the ambitious path of universal health coverage UHC), which translates into ever increased coverage of services and reduced costs for the patients. Alas, except a 12% increase in budgetary allocation to healthcare (it was 16% in budget 2022-23), there is no push to the sector. We need to expand UHC for the so-called ‘missing middle’-uninsured middle income citizens. At a time when digital transformative tools such as UPI, Digilocker, SVAMITVA, and others are being celebrated, we should give a huge boost to the Ayushmann Bharat Digital Mission in ushering the next paradigm of healthcare”.
Mr. Ashish Marathe, CFO, GIM shared that “ The striking features of the Budget for me are:
- The tax slabs/rates changes for personal taxation and the clear move to a no-deduction era by making the "new regime" much more attractive;
- The impetus to infra spending, specifically on mobility related infra including airports, railways and highways; and
- The attention to "green economy" with focus on technology for hydrogen and energy storage, and initiatives like PRANAM”.
Prof. Manas Mayur, Chairperson, PGDM – GIM shared that “The budget has tried to focus on many things and has something for everyone, middle class getting more money, a strong capex push and a lower fiscal deficit target. It may not be a dream budget, but it certainly is a reassuring one.”