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Mainstream, VOL 62 No 7 February 17, 2024

Interim Budget 2024: An Estimate of Cherry-Picked Data Determined by Half Truth and Counter-Assertion | Nisha Mishra

Saturday 17 February 2024


Ever since the Interim Budget laid by the Union Finance Minister Nirmala Sitharaman in the Parliament, the government and the opposition are leaving no stones unturned to acknowledge their achievements during their tenures.

Amidst, the NDA led government applauding its achievements; the opposition released the “Black Paper” titled “Dus Saal Anyay Kaal (Ten Years of Injustices)” highlighting the issues of unemployment, inflation, subversion of institutions and instances of injustices against women and minorities. To counter this, the “White Paper” document was laid by the Finance Minister, outlined that the UPA led government under Prime Minister Manmohan Singh had left the economy “distorted and damaged” marred by fiscal crisis and the present NDA led government claims on rebuilding, rejuvenating and correcting the past errors. But the reality seems to be somewhat different in the current scenario.

Over the past 20 years fiscal trends have shown no significant changes except increase in direct and indirect taxes. India’s Gross Domestic Product (GDP) growth rate shows a sharp decline from 7% in 2016-17 to 3.5% rate in 2019-20. This continuous decline in the GDP growth rate highlights that the present government has failed to structure economic policy coherently. The fiscal deficit announced by the Finance Minister, to be reduced to 5.1% of GDP in 2024-25, further reducing it to 4.5% of GDP in 2025-26. Fiscal deficit connotes shortfall in government’s revenue, wherein expenditure exceeds revenue. In such cases, to bridge the deficit government borrows money from the bond market or sells assets. There is strong relationship between fiscal deficit and inflation in the country. Higher the deficit more is the inflation which forces the government to use fresh money issued by central banks to fund the deficit. The fiscal deficit was high at 9.17% of GDP, during pandemic which has lowered now and is projected to drop to 5.8% of GDP. The revenue mobilization by the NDA government revolved around increasing indirect tax collection through GST rollout and levying high duty on petroleum products from 1.1% of GDP in (2014-15 and 2018-19) to 3.3% of GDP in (2019-20 and 2023-24) and expanding the income tax slab from 2.3% of GDP to 2.9% in 2014-15 and 2018-19, 2019-20 and 2023-24 respectively. On the other hand corporate tax collection fell from 3.3 % of GDP in 2014-15 and 2018-19 to 2.8% of GDP in 2019-20 and 2023-24. Here, the income tax collection forecasted in the interim budget has surpassed the corporate taxes, which shows the government leaning more towards the corporate sector and garnering more demand from the non-rich section of society.

Moreover, the NDA regime has worked less on addressing the supply side factors which has resulted in inflation. The cash transfer benefits under PM-Kisan and food grains to the marginalised can provide income and relief but cannot improve the agricultural productivity. Further, the situation is more worsened with the corporate takeover of India’s food and agricultural economy by enacting the farm laws in September 2020, which is widely protested by farmers. The continued depreciation of rupee has been observed since UPA’s regime which fell from Rs 43 to Rs 60 per dollar and further fell to Rs 83 during present NDA government, which has imported inflationary trends in domestic industry.

Coming to the efficacy of budget on the lives of common people, the Finance Minister claims under NDA rule “people are living better and earning better, with even greater aspirations for the future. Average Real Income of the people has increased by 50 percent.” However, how far this claim is true is ascertained from the official records that estimated the inflation adjusted Net National Income (NNI) of the country was 50.3% during ten years rule of UPA’s regime and has slowed down to 43.6% during NDA’s regime. Moreover, the NSS estimates on Employment and Unemployment Situation in India shows that unemployment rates have declined between 2017-18 and 2022-23 whereas open employment rates were higher during 2022-23, in the last 50 years. Unemployment was higher among the urban youth aged 15-29 years group, while those engaged in self employment increased progressively. The share of regular wage / salaried workers declined in rural areas and increased in urban areas between 2017-18 and 2022-23. 57% of India’s labour force is engaged in self employment and are not living in better income and earnings as claimed by the Finance Minister in her Budget speech.

The Finance Commission which is constituted after every four years, to give recommendations on devolving tax revenues to states. The 14th Finance Commission recommended for 42% of union taxes revenues to state, which was 10% increase over 13th Finance Commission recommendations. The 15th Finance Commission has reduced the financial transfers to 41%. Here the point to be noted is that when direct and indirect taxes have been increasing during NDA rule, why then the financial transfer to state has been reduced. To retain its discretionary expenditure, Union government has reduced the financial transfer to states. This has been proved from the Budget Estimate which shows that gross tax revenue of the Union Government increased from Rs14.6 lakh crore in 2015-16 to Rs33.6 lakh crore in 2023-24, the States’ share in Union tax revenue has increased from Rs5.1 lakh crore to Rs.10.2 lakh crore between these two years. It is evident that the gross tax revenue of the Union government has more than doubled while share of the state has just doubled. Moreover, the Grants-in-aid to the state have also declined from Rs1.95 lakh crore in 2015-16 to Rs.1.65 lakh crore. It has been noted by 15th Finance Commission that Union government has argued for downward revision of States’ share in tax revenues.

The rosy predictions and brazen announcements by Finance Minister presents outrageous macroeconomic narratives which is half truth combined with evasions and counter-factual assertions. “Modinomics” has failed to restructure the economy and achieve macroeconomic goals. India urgently needs a new economic policy with clear objectives and priorities, financing the policies in intelligible and transparent manner to achieve the targets.

(Author: Nisha Mishra, Doctoral Fellow, Department of Political Sciences, Patliputra University, Patna)


  • Union Ministry of Statistics & Programme Implementation.
  • Union Budget Documents, Various Years
  • *Revised Estimates for 2023-24, Budget Estimates for 2024-25.
  • Report of 13th Finance Commission (2010-2015)
  • Report of 14th Finance Commission (2015-2020)
  • Report of 15th Finance Commission (2021-2026)
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