The poll shock has had a salutary effect on the first budget of Modi 3.0. In some ways, the most welcome feature of Finance Minister Nirmala Sitharaman’s record 7th successive budget is the emphasis on employment and skilling of the vast army of jobless youth. The impetus to make our youth — flashing graduation and post-graduation degrees with a good percentage not worth the paper these are written on — employable in productive work is a highlight of the budget. The allocation of Rs 2 lakh crore for skilling one crore youths over five years, along with the upgrading of a thousand Industrial Training Institutes (ITIs), might give our currently aimless educational sector a new and vocation-oriented direction. Five different schemes aimed at making our youth employable should begin to address the problem of joblessness. Paid internships in industries and businesses, with a monthly Rs 5,000 stipend to boot, ought to attract the jobless in droves. There is something in the budget for businesses offering such internships. However, the real test still lies in implementation of the skilling and employment schemes. One of the reasons cited for the BJP falling short of the magic 272-mark in the Lok Sabha poll, was joblessness, especially among the urban youth. The first budget after the election seeks to address this in a significant way. If it succeeds, it should help in reducing the mad scramble for university degrees, and instead direct the school-leavers to the nation-wide ITIs, and from there onwards to gainful employment in industries and services.
Meanwhile, the traditional budget-watchers have reason to be pleased at Sitharaman’s feat in achieving fiscal stability. Budgeting for 4.9% deficit and expecting to bring it down to 4.5% of GDP underlines extraordinary prudence despite generous allocations for infrastructure and other public goods. As the economic survey postulated a day earlier, despite global headwinds and climate challenges, the economy may still attain 6.7% growth in 2024-25, though independent financial institutions postulate it a little higher. Among all the emerging large economies, India’s growth remains the highest. Without doubt, the government has been a smart steward of India’s economy. Allocation of Rs. 11.1 lakh crore or 3.4% of GDP towards capital expenditure signifies that the Modi government will continue to focus on public infrastructural development, including enhanced rural infrastructure. Incentives for the private sector to participate in public infrastructure building such as provision of viability gap funding could be an improvement on the much misused Public-Private-Participation model. Three hundred units of free electricity per month for one crore households through solar panels can be a game-changer for the clean energy industries and lessen our carbon footprint. In one stroke it may also generate goodwill for the ruling party, an abiding concern of finance ministers while shepherding the nation’s finances in a productive manner.
Share markets may not be too pleased, but after the initial hiccup over the slight hikes in long- and short-term capital gains they seem to have absorbed the initial shock. As a result, at the end of trading the Sensex registered but a small loss. Markets have reason to be happy that tax on foreign companies operating in India has been reduced in line with Indian corporations. Reduction of customs duty on gold and silver ought to help check the relentless rise in their prices and de-incentivise smuggling. Meanwhile, the middle class will look in vain for significant cuts in personal income tax. There isn’t much in it in the budget, bar some tinkering with the rates and exemption limits to nullify the effect of inflation. The highest slab of 30% for those earning Rs 15 lakh or more remains unchanged. Middle class is likely to benefit the most from the financial assistance offered for higher education. Under the proposed scheme every year one lakh students will get E-vouchers covering 3% of the annual interest on education loans.
Of course, there was no way the Finance Minister could be unaware that hers is a coalition government. Therefore, it came as no surprise that there is a generous provision for Chandrababu Naidu to get on with his dream capital project Amaravati, which in a foolish act of sheer pique was abandoned by the previous Jaganmohan Reddy government. Indeed, even if the TDP was not part of the Modi government the Amaravati project needed to be salvaged, given that tens of thousands of farmers had surrendered their lands and tens of thousands of crores of rupees had already been spent on it. Nitish Kumar’s Bihar gets a special financial package for flood relief and for lasting solutions to the annual problem. Predictably, the Opposition criticism of the budget lacks bite. If the Finance Minister has been inspired by a proposal in the Congress manifesto, it should be a reason for the party to celebrate, not to complain. Rahul Gandhi does his alleged recently acquired maturity little good by dubbing the budget “kursi bachao”. We haven’t come across a government which goes out of the way to dig its own grave. Besides, the special packages to Andhra and Bihar were well-deserved. As were the special allocations for the hill states affected by the recent natural ravages. On the whole, the budget has both direction and vision, but the real test lies in turning that vision into action.