Budget 2024-25: An Aura of Words for States other than Bihar & Andhra Pradesh | SS Sangwan

The transfers to all states through Finance Commission Grants is lower by 6 % in BE over the revised estimates of 2023-24. Even it has decreased by about 20 % in the last year. Under discretionary grants, the allocation has increased by about 18 % compared to 5 % in the previous year. There is increase in transfer through centrally sponsored schemes by about 10 % compared 5 % in the last year. It also support that transfer to states as per political considerations have increased in the last two years or more.

As usual in previous budgets, the Finance Minister has attempted to make a narrative in terms of ten priorities of the budget 2024. A few references from the Budget Speech(BS) are discussed to dovetail with comments on the budget.

Among the priorities, productivity in agriculture is to be increased firstly by 109 new High yielding varieties But their period of invention and implementation are not mentioned. Secondly, one crore farmers are to be initiated into natural farming just by certification and branding. Thirdly, the missions for pulses and oilseeds are to be achieved without mentioning procurement at their MSPs. Fourthly, Vegetable clusters are to be developed near big cities through FPOs whose success themselves are at their fledgling stage. Above all, a reduction in fertiliser subsidies without secured alternate inputs may dent the sustainability of cereals too. There is a minuscule increase in allocation for agriculture and allied activities otherwise most of the naarative is verbal support like calling farmers as the Ann-data.

In the second priority of employment and skilling, there is an incentive of Rs15000 for 3 instalments for first-time employees. Support to employers “Rs3000 per month for 2 years for creating employment for youth. E-vouchers will be given to one lakh students every year for interest subvention of 3 % on their education loans. The top 500 companies will be directed to provide internships to one crore youth in the next five years where the government will partly support @Rs5000 per month and a time grant of Rs6000. But the million dollar question is providing jobs by the private sector then only other benefits will be availed.

The success of the fourth Priority of Manufacturing & Services is also dependent on loans to MSMEs with Credit Guarantee Scheme and Mudra loans up to Rs 20 lakh. The increasing NPS of this loan is already known from past experience and hence it may dent banks too. Rental housing for workers in PPT mode with VGF support to anchor Industries. The fifth priority is Urban Development where Cities are taken as Growth Hubs and vendor markets. PMAWS yojana will be the main focus with enhanced allocation. Even states will be advised to lower the stamp duties, especially for women house owners

The sixth priority is Energy Security with transmission efficiency. Its focus will be on the PM Surya-Ghar Muft Bijli Yojana and boosting of Pumped hydro energy Storages. Focus on research and development of small and modular nuclear reactors with private participation and setting up of advanced Ultra Super Critical Thermal Power Plants for higher efficiency.

Infrastructure is Priority 7 where large capital investment is envisaged by the Central Government and VGF to the private sector too. Irrigation and flood control in Assam and Bihar. Rs11500 crore is allotted for the Kosi-Mechi interstate link project. Innovation, space economy and next-generation reforms are mentioned without specifying allocations. However, the states of Bihar and Andhra Pradesh found special mention. In Bihar allocation of about Rs 59000 crore for 3 Expressways and a two lanes bridge over Ganga at Buxar (26000 crores), the Koshi-Machi Interstate project and 20 other barrages for flood mitigation (Rs11500). New airports and medical colleges will be set up in Bihar. The Temple- corridors at Gaya and Mahabodhi temples will be developed like the Kashi Vishwanath temple corridor. Rajgir and Nalanda will be developed as tourist spots.

In Andhra Rs150000 crore will be provided for new capital. Big Polavaran irrigation will be completed. A node at Kopparthy on the Vishakhapatnam- Chennai Corridor and another node at Orvakal on the Hydrabad-Bengluru Industrial Corridor will be provided with all essential infrastructure for water, power, railways & roads, etc by the Central Government. Special grants for the region of Rayalseeasmn, Prakasan and north coastal Andhra will be provided.

The above references from the BS prove that it is Bihar and Andhra Pradesh States which have specific project-wise allocations whereas others are drowned in jargon of words. Thus it is high politically motivated budget.

The transfers to all states through Finance Commission Grants is lower by 6 % in BE over the revised estimates of 2023-24. Even it has decreased by about 20 % in the last year. Under discretionary grants, the allocation has increased by about 18 % compared to 5 % in the previous year. There is increase in transfer through centrally sponsored schemes by about 10 % compared 5 % in the last year. It also support that transfer to states as per political considerations have increased in the last two years or more.

In Part B, any customs duties have been rationalized to support domestic manufacturing,

deepen local value addition, promote export and simplify taxation. Critical minerals like lithium, copper, cobalt and rare earth elements are fully exempted from import duties as these are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics. To attract foreign investments, the angel tax abolished tax for forging shipping companies rationalized and corporate taxes on foreign companies reduced from 40 to 35 per cent. Under the direct tax, some taxes and reopening of cases have been rationalized while short and long-term capital gains have been increased. Individual taxpayers have been lured to adopt a new tax regime with a higher Standard deduction of Rs 75000 and improved slabs which will save Rs17500 for a taxable income of upto Rs15 lakh

The FM has also shown a lower fiscal deficit at 4.9 per cent of GDP and decreases in borrowings over 2023-24 through dated securities during 2024-25 at Rs14.01 lakh crore as gross and Rs11.63 lakh crore as net respectively. However, these figures will be tested in their actual which are always higher.

(Author: Dr Sher Singh Sangwan, Former Professor SBI, at CRRID Chandigarh (2012-18) and General Manager NABARD (1983-2008))