What to Expect

A course correction is imminent even though we do not expect any ideological shift from a government committed to neo-liberal economic policies. A tax relief to middle classes and low income groups can be a big relief to them but not a big burden on the government since the revenue coming from those with incomes below Rs.10 lakh is only 6.22 per cent. The government may be happy with the increased filing of returns - 8.09 crore in 2023-24 (against 6.48 crore in 2020), but it should not ignore the fact that 4.9 crore of them were nil income returns which only increased the burden of both the IT Department and the citizens

- P S M RAO

What are we going to get in this budget? People want straight and simple answers. It is not difficult to make a close-to-accurate guess if one first addresses some key questions. What is a budget? Who are its architects? Which segment of people - poor, rich, middle classes, employed, unemployed, farmers, gig workers, etc. is seeking answers?

First things first. The budget is the government's estimated income and expenditure for the financial year - a financial statement. It is a constitutional requirement (as detailed under Articles 112, 114, 266, 266(2), and 270) of the executive to take the approval of the legislature, in other words of the people through their elected representatives in Lok Sabha to spend their money from the Consolidated fund of India.

The budget not only deals with income and expenditure estimates for the budget year but provides the space to the government to announce related decisions, policies, programmes, taxes and concessions, etc. It allocates money for various purposes including expenditure on salary and allowances to its own employees, armed forces et al. It earmarks spending on other essential items like interest payment on borrowed money, allocations to states and union territories of their tax share, grants etc. Then the government proposes spending in various other areas like health, education and other social sector components and subsidies.

All this suggests that the allocations to various sectors would be commensurate with the size of the budget, in other words higher the budget size, higher would be allocations for the people's welfare.

Unfortunately, the size of the Union budget as a percentage of the GDP has been shrinking over the years; it has come down from 17.43 per cent of the GDP in 2009-10 to 14.76 per cent in 2024-25. The upcoming budget is not going to be different given the government's excess concern with fiscal consolidation and lower-than-expected GDP growth.