With the increase in tax collection and a record dividend payout by the Reserve Bank of India (RBI), the government may likely indulge in welfare reforms in the forthcoming budget to be presented on July 23. The renewed thrust on welfare should not only be viewed as an attempt to repair the cracks in the ruling party’s support base but also as a move to please alliance partners like the Telugu Desham Party (TDP) and the Janata Dal (United), who are demanding special category status for their respective states. Speculations are rife that plump financial packages will be announced to fulfil the wish lists of the two most important allies. Similarly, allocations for several welfare projects may also be significantly increased, with a special emphasis on women, farmers and the youth. People engaged in the unorganised sector may also benefit from this year’s budget as the government is searching for ways to accommodate them under the social security net, which is a long-standing demand.
It should be noted that at present, India’s GDP is growing at more than 8 per cent per annum and its tax collection in 2023-24 fiscal year has crossed INR 4.6 trillion, an increase of 20.99 per cent. Moreover, the RBI has announced a payout of INR 2.1 trillion, which is the highest since Independence. Buoyed by such developments, the government is now thinking of spending more on welfare, which seemed like a distant dream until recently as the economy suffered a jolt due to the COVID pandemic. It is expected that Union Finance Minister Nirmala Sitharaman may provide some cash relief and other sops to the farmers to reignite the productivity of the farming sector. The budget may also include some special measures for people vulnerable to floods or other natural events. For this purpose, the allotment of housing schemes may be increased handsomely. A number of other small but significant aspects need to also be touched upon to make this budget a dream one.
There is apprehension that too much emphasis on welfare may derail the country’s focus on infrastructure and job creation. Since the RBI announced a huge payout, several financial experts have asked the government not to spend the money on sops but to create world-class infrastructural facilities that will attract investment. It is feared as the government is all set to present a please-all budget and perhaps will not be in a position to make big announcements regarding infrastructure. The government’s approach to the unemployment problem has also come under heavy criticism. It is argued that instead of offering sops from time to time, the government should make every effort possible to provide jobs to the youth. In the run-up to the recently concluded general elections, it was found that unemployment and inflation hugely contributed to creating anti-incumbency sentiments all over the country. So, ignoring the economic turmoil will not be wise on the part of the government. In all, the forthcoming budget must focus on maintaining a balance between development and welfare.
