In the context of the past three years of global events — long covid wave, supply chain disruptions, Russia-Ukraine war, currency fluctuations, inflation — the upcoming Union budget won’t have fiscal space to experiment. Undeniably, this government has demonstrated prudence when required, and proactive front-ended spending when needed.
Earlier, the Finance Minister had observed that the budget would set a framework to prepare India for the next 25 years (Amrit Kaal). Time & again, the government has demonstrated its concerns for those with lesser access to development & citizenry benefits. Nurturing growth apart, one would expect this budget to continue to focus on socio-economic empowerment with a W.A.R.M budget – one with special emphasis on Women, Agrarian economy, Rural and MSME.
W: Women empowerment
While gender-based budgeting has been a part of the Union budget since 2005-06 focusing on gender-respectful programmes and schemes; allocation of resources; implementation, execution, assessment etc. to address gender disparities women empowerment has been given further push since 2014-15, with important steps taken towards gender mainstreaming and financial inclusion in policy actions across various spheres. India has shown exemplary efforts around women Entrepreneurship, be it the Pradhan Mantri Jan Dhan Yojana (PMJDY), the Pradhan Mantri MUDRA Yojana (PMMY), Startup India and Stand-Up India schemes. The FY24 budget should see continued announcements that encourage women entrepreneurship as well as asset ownership by women for their financial security.
With India expected to become the most populous global nation, commitment to public health focusing on sexual and reproductive health would need higher budgetary allocation focusing on outcomes in fertility programmes, women health & safety, girl child education and women empowerment.
A: Agriculture
The global food grain crisis has shown how important the Indian agrarian economy is. Agriculture has traditionally been the mainstay of our economy with heartening news coming from National Statistical Office (NSO) data that the agriculture sector (including forestry and fishing) is expected to grow at 3.5 per cent in the present fiscal.
Focus is required to improve crop yield efficiency and supply chain both to benefit farmers thereby improving the productivity of the agriculture sector. Government policy interventions are required to support the development and adoption of technology in the sector.
Diversification of agri-business can occur in allied areas such as food processing, floriculture, horticulture, livestock production, dairy etc. where enhancement of ease-of-doing-business will make it easier for existing players and new investors both to avail scheme benefits. Budget should incentivise the creation of large storage facilities, cold storage, processing and distribution units to help add value to agriculture products.
Enhanced budgeting to encourage Kisan drones, especially direct funding to the startup ecosystem that can integrate into the public delivery framework would be beneficial. Additional budgets for soil rejuvenation projects is another expected wishlist. Lastly, the budget needs to give direction to the all too important crop burning issue which causes parts of India to literally shut down at certain times of the year.
R: Rural – Broad-basing the economy
Given our demographic dividend, potential rests in employability and skill development of the rural youth by eliminating mismatch between education and employment opportunities. Rural India needs to be trained for the MSME sector, for self-employment & as service integrators in the production process. Tweaking MNREGA for enhanced asset creation with special focus on groundwater recharge by re-activating ponds will ensure local self-reliance. Education and knowledge will bring in its wake adaptation of newer technologies/areas in cultivation and diversification of economic activities. The gig economy is here to stay and rural India can provide the means to support it.
Internet has integrated the hinterland with the urban areas and here, diversification of the service sector by associating rural youth in the software industry by providing incentives can ensure that the urban areas are somewhat decongested, while rural youth is employed both in their land and the software industry on a work-from-home model.
Reforms are essential in the land holding patterns and whether cooperative pooling models are possible given the diminishing land holding for economic goals, primarily agriculture needs to be thought of.
M: MSME – the messiah
India has 63 million MSMEs which employ 40% of India’s non-farm workforce, contributing to nearly 25% of India’s services output and 33% of its manufacturing output. What works to India’s advantage is that it has had historical experience of “traditional trade guilds”. The sector provides employment to over 11 crore Indians contributing over 29% to the GDP. Micro sector with 99.4%, Small sector with 0.52% and Medium sector with 0.01% are the estimated enterprises. 3.24 crore MSMEs (51%) were in the rural area and 3.09 crore MSMEs (49%) in the urban areas. The sector is critically important, as it not only fosters entrepreneurship but correspondingly generates large employment opportunities at a comparatively lower capital cost. At the lower end it has single-person entrepreneurs like grocers and everything in between from commercial vehicle owners to village craftswomen. Thus, it is a vast spectrum of businesses and employability both.
MSMEs are also not only large consumers of goods of services and hence aggregate demand, which is crucial for capacity utilisation and private sector capex but also linked to the growth of smaller Tier towns and rural India, and hence can support the Government’s initiatives for increasing farm productivity and doubling farmers income.
The sector needs a boost in “export competitiveness” for which investments in physical infrastructure across India have to be fast tracked multi-fold. Initiatives to give collateral free loans already exist. We need to speed-up the process of sanctioning credit and quicker clearance of MSME dues. What can give a further push is increasing digital-lending initiatives where banks & fintechs partner to improve credit access to the MSME / SME ecosystem. To this light, one wonders if we can see a MSME / SME focused digital-only bank as well as a University with research capabilities to support the sector.
Last word
The Government has not used the budget as an exclusive policy announcement window. It has announced policy initiatives and schemes when needed.
That said, a Union budget can never wow all stakeholders. It will have its own set of detractors, as well as criticism. It is okay if not all programmes or schemes might succeed to the plan. The test of a budget is in its actual execution and balancing the numbers through the year ahead. With the current economic concerns & geopolitical worries globally, the budget can only aim to develop sectors for long term stability and contribution to the national economy.
What is certain however is that economic empowerment is the key to a more inclusive society, which a W.A.R.M. budget can add value to. Such a budget can indeed not only aid the aggregate economy to grow, but also make it inclusive growth across citizenry segments.
Dr Srinath Sridharan is a corporate adviser and author of Time for Bharat. He tweets @ssmumbai. Dakshita Das is a policy expert and former civil servant
