The Union Budget of India is a highly anticipated event that sets the economic agenda for the country for the coming year. In recent years, the Budget has undergone significant changes, moving from a traditional five-year plan model to a more flexible approach that allows the government to respond more quickly to changes in the economy. With a rising share of GDP and a growing population and workforce, the Union Budget is an important tool for guiding the country’s economic growth and development.
Let us look at the changes that has happened in the Union Budget under Prime Minister Shri Narendra Modi.
Shift from plan and non-plan classification to revenue and capital expenditure
The Budget stopped using the plan and non-plan classification system and started classifying expenditure as revenue and capital expenditure. This change aimed to make the budget more transparent and easier to understand. The Union Budget was classified into plan and non-plan expenditure, with plan expenditure being related to the five-year plans and non-plan expenditure being related to non-developmental spending. A large portion of the Budget was devoted to plan expenditure, with a focus on meeting the targets set in the five-year plans. This resulted in a larger allocation for sectors such as agriculture, rural development, and industry, among others.
Increased emphasis on fiscal consolidation:
The government has placed a greater emphasis on fiscal consolidation, or reducing the fiscal deficit, which is the difference between government expenditure and revenue. This has been done to ensure long-term financial stability and reduce inflationary pressures. The government placed less emphasis on fiscal consolidation, or reducing the fiscal deficit, compared to the budgets presented after 2014.
Increased focus on transparency and accountability
The government has introduced measures to increase transparency and accountability in the budget-making process, such as publishing the budget documents in a timely manner and making them accessible to the public. There was less transparency and accountability in the budget-making process, with budget documents not being widely accessible to the public.
Increased allocation for social sector programs
The government has increased allocation for social sector programs, such as education, healthcare, and rural development, to address the needs of the poor and marginalized sections of society. Rajiv Gandhi had famously stated that “only 15 paise of every rupee meant for the poor reaches the beneficiary”. He made the statement when he was the Prime Minister (1984-1989). The statement was widely seen as an admission of the inefficiency and corruption in the delivery of government welfare programs to the poor. The implementation of the JAM (Jan Dhan-Aadhaar-Mobile) trinity, which was launched after 2014, has aimed to address some of the issues highlighted by Rajiv Gandhi.
Increased focus on digital initiatives
The government has increased focus on digital initiatives, such as the roll-out of the Goods and Services Tax (GST), the implementation of the Direct Benefit Transfer (DBT) program, and the promotion of e-commerce and digital financial services. Additionally, the government’s focus on digital initiatives and financial inclusion has also helped to boost growth. The launch of programs such as Digital India, Jan Dhan Yojana, and Aadhaar have helped to improve access to digital services for citizens and increase financial inclusion. The government’s focus on digital initiatives has also helped to promote financial inclusion and has been instrumental in boosting the country’s economic growth.
The change resulted in increased transparency, focused spending, better tax administration, focus on infrastructure and promotion of entrepreneurship and innovation. The reforms in tax administration and the focus on infrastructure development have helped to improve the investment climate and to create a more stable and resilient economy. The promotion of entrepreneurship has also helped to boost job creation and to promote innovation. The impact of these changes on the Indian economy has been positive, with the economy growing at a rate of around 7-8% per year since 2014.
It is indeed true that India has undergone significant structural shifts and economic growth since 2014, becoming one of the fastest-growing major economies in the world. The government’s reforms and initiatives, such as those mentioned above, have likely contributed to this growth. The share of India’s GDP is now at 3.5%, as against 2.6% in 2014 and is likely to cross 4% in 2027, the current share of Germany in global GDP. India’s economy has grown significantly since 2014, with a rise in its share of global GDP. The government’s reforms and initiatives, as well as a growing population and expanding workforce, have likely contributed to this growth.
In conclusion, the Union Budget of India has undergone significant changes since 2014, moving from a traditional five-year plan model to a more flexible approach. This shift has allowed the government to respond more quickly to changes in the economy and implement reforms aimed at boosting growth and development. As a result, India’s economy has grown significantly, becoming one of the fastest-growing major economies in the world. The government’s focus on infrastructure development, tax reforms, and promotion of entrepreneurship has contributed to this growth. With a rising share of GDP and a growing population and workforce, it will be interesting to see what the next Union Budget has in store for the Indian economy.
A government’s budget is a moral document that reflects the priorities of a nation
– Robert Reich
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