Considering the global turmoil, the Indian economy is also facing tough challenges. Therefore, the forthcoming Union Budget should be innovative and surpass the landmark budget of 1991. While referring to the history of the past 75 years, the Indian economy has faced several turbulences and crises, but it could combat adversities and emerge with greater strength. 

Post-independence, India inherited a fragile economy saddled with abject poverty and poor infrastructure and negligible industrialisation. In 1950-51, Public income (GDP) was barely Rs 10181 crores at market prices and Rs 4.95 lakh crores at 2011-12 prices. India had tough challenges on various fronts such as developing Industries, curbing imports, boosting GDP, reducing poverty, building infrastructure, strengthening defense and many such allied areas. By now, India has surmounted those acute problems but job crisis, chronic inflation, and poverty is still persisting at a lower scale. Those must be resolved by meeting aspirations of talented youths.

In 2021-22, India’s nominal GDP was Rs.236.6 trillion. As per the budget estimate, the combined expenditure of Central and State budgets was Rs.71.6 trillion, about 30% of nominal GDP. This was financed by taxes up to 16.2% of GDP, 9.6% from fresh borrowings and the balance from other capital receipts and non-tax revenue. 

The combined debt of centre and states has already exceeded 87% of GDP causing an inevitable interest burden. Considering inflation and low income of the bottom 60% population, subsidies are also inevitable. Defence expenditure can’t be compromised unless the conflicts with neighbouring nations are resolved. Infrastructure spending is also crucial for improving economic efficiency and removing bottlenecks of the growth track. Considering backlog, infra-spending for health, education, water and sanitation is equally essential. 

For all these crucial needs, the centre and states must jointly ensure that such huge budgetary resources are wisely spent. Populist schemes in disguise of “social welfare” must be redesigned and fancy infrastructure be deferred. It’s high time to identify and cut wasteful expenses. 

Top priority must be given to achieving GDP growth (at a constant price) above 7% that will increase tax collection and boost public income. Higher GDP growth shall resolve many problems. Repo rates may be rolled back to 4.0-4.5% as that will cut the interest burden on the Government and also support private investment for growth. “Cost-push” inflation may be resolved by reducing taxes on energy and minerals which will be compensated by the resultant growth. 

About 50% of job-holders are self-employed, mostly in MSME and Agro sector. The MSME sector needs liberal and cheap credit duly supported with a modified “Credit guarantee scheme” to include both new and existing borrowers. GST on the products of Micro and Small sector must be exempted somewhat similar to the previous “Excise duty regime”. By this, MSE sector shall revive and generate huge Jobs. In the sequel, the subsidy burden shall reduce in future years.

MSP may be guaranteed to farmers by an innovative method without any fiscal burden, So as to supplement, “Food processing industries” may be promoted and the export of processed food may be liberally allowed. That will increase farmers’ income and reduce the subsidy burden.

Priority must be given to energy (primary & secondary) and logistics infrastructure.  We must ensure cheap and surplus energy and the import dependency must be reduced. High priority to green energy may be trimmed for a few years. Budget allocation for rail transport of goods must be increased compared to road transport for reducing logistic costs. For mobilising resources, the railway may be converted to a listed PSU corporate that will ease the fiscal burden. 

For infra-spending, it is not feasible for the government to take the entire burden. Therefore, budgetary resources should be leveraged 4/5 times by pursuing joint ventures with states, PSUs and large corporates in separate entities.  Likewise, a few innovative schemes may be designed for leveraging budgetary resources. 

India must extend “export incentives” on the incremental exports which may be subsequently withdrawn in a phased manner after improving the economic efficiency of the nation. This will reduce the “current account deficit” (CAD) and accelerate GDP growth. Interim fiscal burden shall be well compensated due to tax collection on the additional GDP growth. By this, the rupee shall stabilise and global investments shall surge. 

For achieving higher GDP growth, private and global investment in productive assets must increase. For this, the confidence of investors must be improved through a series of structural reforms and easement of business and taxation laws. Those are largely influenced with British Colonial legacy. A global turmoil is an opportune time for undertaking such radical reforms and changes in business and taxation laws.

The forthcoming budget is an opportunity for announcing policies along with key reforms for setting the ball in motion. Let us remember that, in the 1991 budget, the same strategy was adopted which laid the foundation of today’s fast-growing economy. If so, why can’t it be done in the upcoming budget? In my opinion, a vibrant democracy, unity, trust and team spirit are the vital keys to success. Let us demonstrate to the world fraternity that India is not only capable of surviving the global turmoil but it can also rise with greater strength.