Search for Balance

Next fiscal, the government has the discretion to play around with only Rs 1 lakh crore. In due recognition to the slowdown in growth which may have structural dimensions and macro-level constraints at various levels of the economy, the government, in moving away from its earlier budgetary strategies, has refrained from adopting a public expenditure-led economy which, in the absence of easing out structural bottlenecks, would only raise inflation and erode whatever extra is being made available with tax cuts towards consumption spending

- NANDITA CHATTERJEE The writer, a retired IAS officer and former Secretary to the Government of India, is an Advisor to the United Nations

India's budget for FY 25-26 may be perceived as a balancing act. While the increase in capital expenditure in the current budget has been similar to the budgets of previous years, there has been a shift to a more consumption-led path. This author, while analyzing the budget of 2022-23, (The Statesman, 4 April 2022), had noted that the underlying philosophy of that budget was "investment for growth", interpreting thereby the Government of India's actions in backing up its future plans for the economy with capital expenditure in sectoral allocations with an outlay of Rs 35 lakh crores which was a 35 per cent rise over that of the previous years, constituting 2.9 per cent of the GDP, the highest over the last twenty years.

Over fiscals 2023 to 2025, the Union government, however, has spent 5.4 per cent less than what was budgeted as capex allocations. Grants in aid for creation of capital assets was 15.6 per cent lower than budgeted during these three fiscals. Disappointments were reflected in lower expenditure in both the Pradhan Mantri Awas Yojanas (PMAY), Gramin as well as Sahari, as well as in the state apex loans falling short of their Rs 1.5 lakh crore target.