Wish list from the budget: A common Indian's perspective

This article is authored by Vipul Prasad, Founder and CEO of Magadh Capital Advisors LLP.

As the air crackles with anticipation for the upcoming union budget, I, like millions of other common Indians, find myself scribbling down a wish list. This list is shaped by the simple hope for a sustained phase of high and equitable growth for India. Two things are to be kept in mind here.

First, increasingly budgets are losing their signalling effect for markets, and rightly so. The government should use the budget more as an exercise to explain its financials for the current year and plan for the coming year. Policy making should not be limited to the budget day and instead, it should be done through the year as per requirement. Second, this year due to the impending general elections, the upcoming budget will actually be a vote on account implying it may not have many policy announcements.

The full budget for FY2025 will likely be presented after the election. However, the upcoming budget on February 1, 2024, will still be important for two reasons. It will be interesting to watch the announcements of populist measures, if any. Further, the budget may also indicate the thought process of the government regarding the policy framework it may apply if it is re-elected. 

Here is the wish list.  

1. Taming the Deficit Monster: The first item on my list is a clear and achievable plan to reduce fiscal deficit. We understand the challenges. The pandemic's scars still linger, and the global macroeconomic situation seems tenuous at best. But we also see growing debt on the government’s books, and rising cost of living. A glide path targeting a 50-75 basis point reduction in FY2025, over this financial year, would send a strong signal of fiscal prudence, instilling confidence in investors as well as rating agencies.

2. Subsidies: From Handout to Hand Up: The pandemic necessitated support, but now, as the dust settles, it's time to re-evaluate subsidies. We need to move faster from blanket handouts towards targeted interventions. Improving the delivery mechanism, focusing on the truly needy, and incentivizing self-reliance will ensure these resources are used efficiently, empowering individuals and propelling long-term development.

3. Building the Backbone of Progress: Infrastructure: We need a sustained thrust, a 15-20% increase in infrastructure spending to continue weave a web of connectivity across the nation. This isn't just about convenience; it's about unleashing a solid multiplier effect by unlocking economic potential, creating jobs, and ensuring smoother movement of goods and people, giving wings to our aspirations.

4. Taxing Times: A Fairer Burden for All: The burden of taxes shouldn't solely rest on the shoulders of salaried individuals. We need some relief for those at the lower end of the income pyramid, those struggling to make ends meet after paying taxes. But alongside, let's initiate a wider conversation about expanding the tax net. Large farmers with vast landholdings, and small and medium-sized businesses enjoying high incomes – these groups too have a responsibility to contribute to nation-building. Linking tax to land size and better income assessment could be a starting point, ensuring a more equitable distribution of tax burden and aiding tax collection.

5. Investing in the Future: Manufacturing, Education, Healthcare: We need an enhanced thrust on manufacturing, creating jobs, and making India a global hub for innovation. Education and healthcare are the bedrock of a strong nation. Increased allocation for public schools, skill development programs, and accessible healthcare will equip our youth and ensure a healthy, productive population.

This wish list isn't doesn't seek miracles, just a budget that whispers disciplined growth, a budget that ensures every citizen can contribute to, and benefit from, India's growth story.

Disclaimer: The opinions expressed above are personal and may not reflect the views of DSIJ.