By Anjan Roy
Hazarding a guess a few forthcoming price range is at all times difficult. A price range is ready after ingesting mountain a great deal of inputs from all departments of the federal government, the finance minister’s strategic financial considering beneath the general steering of prime minister’s instructions. The top product is at all times a [precarious compromise on all fronts.
But one could surely take some broad potshots about the interim budget for 2024-25 to be presented on February 1.. Fundamentally, an interim budget is just about a statement of an incumbent government’s revenues and expenses and a plea from the government for giving an advance clearance from the legislators to carry on the essential functioning of the government.
But then, interim budgets are never a minimalist statement like that. Particularly when it presages an election within a few months. The budget invariably becomes an exercise in trumpeting about the incumbent’s achievements, and showcasing these as outstanding steps never taken before.
But some of India’s interim budgets, including the first one, had been rather statements of woes before the country and the economy. Three worries had dominated India’s budget making in the early days immediately after Independence. Shortages of food, foreign exchange and consequently, rising prices had dogged successive finance ministers. These had been reflected in their anguished budget speeches.
Fortunately, since the introduction of the economic reforms in 1991 and onwards, budgets have increasingly become a statement of the country’s ambitions. BimalJalan, former finance secretary and governor of RBI, had once given words to this: “we can now afford to aim big.”
So, this year’s budget, though an interim one now, would be ambitious in the goals and outlays. It would be imbued with the spirit of an emerging $5 trillion or more economy. So one could expect, even in an interim budget, there would be announcements regarding large outlays for infrastructure, subsidies for the special groups and larger than life game plans.
Coming as it is only two months ahead of a general election, the coming budget will have to have a populist stance. The political stance of the budget must address some key elements. The prime minister has been talking about women empowerment. This is a model cause, but it can have a shrewd political calculation. They are the half of the voting population and roping them in, getting their approval to an extent that they got for the incumbent party can be rewarding.
The next general election will have a major component of youth voters. Many of them would be the first time voter and the younger population, even now being a dominating segment of India, their sympathies could matter. Unfortunately, the record of youth employment and scope for jobs is nothing to write home about. Thus, schemes for youth employment and jobs creation should be a prime area of attention for the finance minister.
The prime minister has been talking of skills in India. The development process calls of skills, as mere literacy cannot achieve much, though that is the necessary condition which has to be fulfilled. Skills formation o the base of a literate India is what should critically determine the pace of development. On the other hand, literacy and skills development among the younger women folk could bestow unique development capabilities.
The third component of the budget, in view of the general election, would be to wean over the agriculturists. Farmers and their sympathies give a lot of weight in a general election. The government’s efforts to reform the basics of the country farm economy had backfired. The changing of the present Mandi system and interaction of more competitive market structures did not go down well with the farming class. In fact, those reforms had to be rolled back. How best to gain their confidence and trust, should be a test for the finance minister, in formulating some farmer friendly schemes.
If these are the broad politico-economic compulsions before the finance minister for her budget, there are some real hardcore economic issues which would surely weigh on the minister’s mind.
Whoever is glued to the present-day world cannot possibly escape the idea of “Artificial Intelligence” or better known AI. The prime minister in his over-enthusiasm during his American tour had described it as a collaboration between America and India. But AI is turning out to e much more than that and since prime ministerial visit, America-India relations have somewhat receded.
Nations are vying with one another for a slice of the AI cake. Everyone is seeking dominance in this nascent technology space. But it will remain the core competence of a few — a few who have large data competence and a deep reservoir of data. After all, any AI progress can come only on the back of data and only a few, among them India, has potential of large data backup.
Even though, interim, the forthcoming budget would surely have provisions for encouraging AI and related activities in India. Since an American start-up, Open AI, released its path-breaking “Large Language Model” based AI product, Chat GPT, the world is taking feverishly about the potentials of this tool.
The prognostications have been bewildering. The spirit behind ChatGPT, Sam Altman, had once said that these kinds of artificial intelligence machines could wipe out entire humanity. More recently, he had said that these could provide immense opportunities for improvements. Some are claiming that these models could become even sentient and exceed human intelligence.
Whatever is the future, all major players, in this case countries, want to get a handle on to the technology. They want their own AI, ChatGPT and ever newer products. While until now all the fresh developments in this area have come mainly through private initiatives, that is, small start ups breaking out with new products and developments, some of the leading thinkers in these sectors now believe that in future it would have to come from public initiatives.
India has shown its interest in capturing some of the initiatives in AI and affiliated activities. The government would have to create a conducive environment in which such technology breakthroughs could be nurtured in the country. It calls for outlays of funds at easy terms for start up firms as well as public sector institutions.
This takes us to a allied area: that is, nurturing the start ups. These have been virtually economic romance stories: small bands of creative young men and women venturing out to create altogether new idioms in business and products. It is the story of intellectual capital of the individual or collaborators giving new framework for business.
Indian budgets must then provide and create that eco-system for nurturing start-ups. Easy funding, easier regulations and clearance regimes and flexible framework for business would be needed for these start-ups. A start-up friendly tax frame, providing tax benefits for income recognition, is also a need. Above all, only a handful of start-ups would be successful and survive. The majority should wire away, calling for a very understanding and comfortable framework for liquidating failed initiates.
Lastly, to be relevant and remain in the frontiers of the present world, India must demonstrate its concern for preserving the environment. We are already witnessing the weather related calamities across the world. Temperature averages are rising, climate systems are becoming much less predictable. Freak weather incidents are far too common.
Above all, the pandemic has taught us painful lessons. We must take initiates to be prepared for facing the next possible pandemic. Health care system must get priority and should receive investment. Private initiatives have happened, the government structures are flimsy and inadequate. These call for money and large investments. Successive budgets should build up India’s health infrastructure.
India’s budgets must reflect these concerns and provide for mitigating measures. These cost money, no doubt. But then, we can afford better now.
The macro-economic and fiscal situation is no doubt comfortable. The average indirect tax collection, mainly GST, is way above the grim predictions of the past. These are more than Rs1.5 lakh core a month. Direct tax collections are buoyant, showing growth in the industrial and services economy. Fiscal deficit is likely to stay within limits. (IPA
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