ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Ajaya Sahu

Massive Capital Expenditure, Modest Fiscal Consolidation, and Cut in Pillars of Social Safety Net

The finance minister’s five budgets, including the 2023–24 budget, demonstrate a welcome commitment to transparency. They also reveal a clear strategy of combining high capital expenditure-led growth with fiscal consolidation. But post the pandemic, these strategic priorities have been pursued at the cost of weakening the two key pillars of India’s social safety net—food subsidy and the Mahatma Gandhi National Rural Employment Guarantee Act income support.

The Budget Bets on Capital Expenditure to Revive Growth

The budget has bet on a hard strategy of government capital expenditure-led growth. This article looks at how the massive increase in capex is planned along with continuing fiscal consolidation in the context of the budget strategy. It also discusses the receipts and expenditure budgets. Finally, it concludes after discussing the likely macroeconomic impact of the budget.

Fiscal Compression, Jeopardised Recovery, the Humanitarian Crisis and Reforms

This paper assesses the impact of the budget on the economic recovery, debt dynamics and fiscal–monetary policy interaction. It also looks at how the budget has addressed issues of lives and livelihoods. It concludes by noting that the fiscal stance of compression in the 2021–22 budget has jeopardised an already faltering economic recovery that is now jeopardised by the second wave of the pandemic.

 

Fiscal Restraint Trumps Fiscal Stimulus

The 2020 Union Budget has failed to provide any fiscal stimulus based upon the assumption that there is no fiscal space for providing growth stimulus. In doing so, it missed out on the opportunity of leveraging an additional fiscal space of around 10% of the gross domestic product that could have been tapped through revenue and expenditure rationalisation measures.