THE FORCED CAPEX GAMBLE IN BUDGET 2023

A Union budget should typically be an accounting exercise of government revenues and expenditures for the past year and projections for the coming year.

Over the years, it has evolved into a confused mix of political promises, economic strategy and accounting technicalities in a media spectacle. It is best not to get into the hoopla and analyse the budget for what it is—revenues and expenditures. Where a government gets its revenues from and what it spends on can reveal a lot about the politics of the ruling party. In a well-functioning, frictionless democracy. For the purposes of this column, let us pretend India is still one.

Taxes constitute the bulk of the government’s revenues. Taxes come largely from three sources: corporates through corporate tax, salaried class through income tax, and common people—rich and poor equally—through indirect taxes such as GST, excise duties, etc. In 2010, for every hundred rupees that the Union and state governments combined collected, ̀ 40 came from corporates, ̀ 21 from the salaried class and `26 from the common people. Today, corporates contribute only `25 while the common person contributes `47.

The tax burden has been overturned entirely in the Modi regime, reflecting the fundamental shift in economic philosophy vis-à-vis the UPA regime. To be clear, this was a legitimate economic strategy that was articulated in a ‘minimum government’ campaign promise in 2014 that overtly believed in incentivising the private sector for trickle-down economic benefits. Only, there have neither been any benefits that have trickled down nor has the government been ‘minimum’.