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

BudgetSubscribe to Budget

How to Make Budgets with a Dearth of Data

Given that the reliability of official data has come into question, there is no way to understand the full extent of the issues that various sectors are facing without accurate data.

Priorities of Uttar Pradesh Budget: As Infrastructure Expenditure Rises, Health and Education Face Neglect

Successive state governments in Uttar Pradesh have tended to neglect the social sector and this is reflected in the budgetary allocation to the sector. In the 2018 –2019 budget, t he increase in budgetary allocation for sectors like power, transport, and irrigation has been much higher than that for health or education.

Erroneous Understanding of Macroeconomic Challenges

The government chose not to adequately expand budgetary expenditure to stimulate aggregate demand due to an erroneous understanding of India’s macroeconomic challenges. It relies heavily on imagined fiscal gains from demonetisation and the introduction of the Goods and Services Tax regime. The Union Budget 2017–18 was a missed opportunity for the government and our economy.

Emerging Issues in Union–State Fiscal Relations

The restructuring of non-Finance Commission Grants is an improvement when it comes to scheme-related transfers. However, when 10 schemes constitute 90% of core grants, there is further scope for rationalisation of these schemes. The implications of following a sustainable debt path under the new Fiscal Responsibility and Budget Management framework in the budget indicate a larger fi scal correction at the state level vis-à-vis the union government.

What Does the Rural Economy Need?

The agricultural sector has performed worse than the other sectors over the years. The shares of non-agricultural employment and output have increased, while70% of agricultural householdscannot meet their low consumptionneeds even after diversification of sources of income. An analysis of budgetary provisions for the rural economy suggests that the government has not done enough to address some of these well-documented problems, and does not have the required vision to substantially increase rural employment opportunities.

An Examination of Revenue Generation

The revenue side of the budget is scrutinised to understand if the government is being realistic about revenue generation in 2017–18. Clearly, there is over-optimism, given that economic growth will be slow. Too much is expected from voluntary disclosure and penalties, while incentives are not in place. It would make sense to allow some slippage in the deficit targets in order to revive the economy. In addition, the increasing problem of cesses is discussed with reference to the Krishi Kalyan Cess to assess whether cesses serve the purpose for which they are introduced.

Underutilised Fiscal Space

The hike in tax devolution to states by the Fourteenth Finance Commission to give a larger fiscal space to the states has meant sharp cuts for centrally-sponsored schemes. Studying the case of Maharashtra, it is found that without adequate norms and yardsticks of development expenditure, the state has failed to exploit its fiscal potentials.

Small Savings Policy Circumventing Tax Sops

Inflation benchmarking of small savings and provident fund interest rates, which is a sound policy in and of itself, has the added advantage of lowering the interest paid when there is inflation and tax exemptions cannot be touched.

Risks and the Budget

In the Budget for 2003-04 the government has sought to underwrite risks faced by different segments of the population. When governments assume additional risks it is necessary to ask whether the mode of risk mitigation proposed is appropriate and who would benefit from such intervention. An attempt is made here to examine these and related questions in relation to the budget.

Life Cycle Concerns:Ineffectively Addressed

The lifetime concerns of individuals, though a key focus of the Budget for 2003-04, are nevertheless addressed in such a way that human capital - the engine of growth - will not be accumulated in an equitable or efficient manner.

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