GOVERNMENT BUDGETING

Mains Enrichment Cards 6th September 2023

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GOVERNMENT BUDGETING: REVISION CARD

INTRODUCTION:

Budget:Constitutional Aspect	Government Budget is Annual Financial Statement that explains estimated receipts and expenditure in a financial year. It is mandated by Article 112 to be presented in the Lok Sabha.
Union Budget 2023-24	With SAPTRISHI and 4 transformative opportunities viz, Women Empowerment through SHGs; PM VIKAS; Tourism Promotion; Green Growth - the Budget 2023-24, laid strong foundation of empowered and inclusive economy in Amrit Kal (2023-2047).
Gender Budgeting	1) Definition based: Gender budgeting refers to bringing gender aspect in budgetary process to address the challenges of gender hierarchies and promote gender equality. 2) Current Affairs Based: While the budgetary allocations to schemes benefiting women have grown nearly 13% since inception, but its overall share in Budget has remained at just 5%.

FORMULA BY theIAShub

Government Budgeting = National priorities + Developmental Roadmap + Social Welfare Effective Budgeting = Effective Revenue Collection + Transparent & Balanced Allocation + Effective Resource Management + Fiscal Responsibility

SPEECH BY PROMINENT PERSONALITIES (PM, PRESIDENT, UN OFFICIAL et. al)/RECOGNITION IF ANY:

First budget of the Amrit Kaal lays a strong foundation for the aspirations and resolutions of a developed India: PM MODI

“Taxpayers are not just sources of revenue, they are also our partners in nation-building”. President Droupadi Murmu

While the making of the budget may be an annual routine, its effects are continuous and momentous, affecting the economy and the life of the nation: Former PM Jawahar Lal Nehru
The budget is not just a statement of financial resources; it reflects the vision, priorities, and the development agenda of the nation: EX-VP M. Venkaiah Naidu

CURRENT DEVELOPMENT: HIGHLIGHTS OF BUDGET 2023-24

Theme: Focus on inclusive development - Sabka Sath, Sabka Vikas with Seven National Priorities (SAPTRISHI)

Inclusive Development: a) Agriculture- Make India a global hub for 'Shree Anna' (Millets); Atmanirbhar Clean Plant Programme; Digital Public Infrastructure b) Education & Skilling: National Digital Library c) Health: Mission to eliminate Sickle Cell Anaemia by 2047

Reaching ‘Last Mile’: Aspirational Blocks Programme; PM PVTG Development Mission; Water for Drought Prone Region

Infrastructure & Investment: Increase in Capex for Infra by 33% to Rs 10 Lakh Cr; Support to States - 50 years interest free loan.

Unleashing the Potential: Jan Vishwas Bill; Centres of Excellence for AI; National Data Governance Policy

Green Growth: National Green Hydrogen Mission (19,700 crores outlay); Bhartiya Prakritik Kheti Bio-Input Resource Centres; GOBARdhan Scheme

Youth Power: Pardhan Mantri Kaushal Vikas Yojan 4.0; National Apprentice Promotion Scheme
Financial Sector: Credit Guarantee for MSMEs; Financial Information Registry; Small Savings Schemes - Mahila Samman Savings Certificate.
GST Collections: For the first time, gross GST collection has crossed ₹1.75 lakh crore mark in April 2023.

DATA/FACT:

Taxpayers	Only 6% of Indian population pays taxes (Ministry of Finance)
Tax to GDP Ratio	Centre Government: 11%
Tax Revenues (2022-23)	Overall tax collection in 2022-23: Rs 30 lakh crore (Direct Tax: 52%; Indirect Tax: 48%) GST: Average monthly GST collection at Rs. 1.5 Lakh Crore
Govt expenditure [Budget 2023–24]	Total Government Expenditure: 15% of GDP Capital expenditure: 3% of GDP (highest ever Capex of 10 Lakh Cr.).
Exp. on Subsidies	2% of GDP (Union Budget 2023-24) ->Food Subsidy: 2 Lakh cr; Fertliser Subsidy: 1.75 lakh cr
Budget Deficit Target (FY24) (% of GDP)	Fiscal Deficit: 5.9% (Down from 9.2% in FY21) ->Target: Reduce below 4.5% by 2025-26 Revenue Deficit: 2.9% FY24 (Down from 7.3% in FY 21) States Fiscal Deficit: 3.5% of GSDP
Disinvestment Target (2023-24)	₹51,000 Crore (Target met only 2 times in last 10 yrs (2017-18 & 2018-19)

KEYWORDS:

BODY: One nation, One Tax; Social contract; Tax as an Economic glue; Bounties for the Well Off; Monetise & Modernise; Low Equilibrium Trap; Shrinking ‘Fiscal Space’/’Fiscal Footprint’;
CONCLUSION:

Tax Reforms: From ‘Tax Terrorism’ to ‘Tax Transparency’; From ‘Web of Taxes’ to ‘Seamless, painless and faceless’ Tax System; From Disputes to Trust: ‘Vivaad Se Vishwas’
Fiscal Policy & Consolidation: From ‘Fiscal Bonfire’ to ‘Fiscal Prudence’/ ‘Fiscal Marksmanship’; “3 T Test” of fiscal stimulus to be effective: Timely, Temporary and Targeted.
Subsidies Management: From Dole to Development; From ‘Wasteful’ Expenditure to ‘Welfare’ Expenditure; From ‘Culture of giveaways’ to ‘Culture of Empowerment’.

COMMITTEES RECOMMENDATIONS/NATIONAL OR INTERNATIONAL REPORTS:

NK SINGH committee for FRBM act: recommended Debt-to-GDP ratio: 60%; bring down the fiscal deficit to 2.5% by 2023; Escape Clause in exceptional circumstances;
C Rangarajan Committee: suggested Outcome budgeting, emphasized on fiscal discipline, subsidy rationalization, and efficient resource utilization to stimulate economic growth and development.

GOVT SCHEMES, POLICIES, AND INITIATIVE:

Reforms in the budget process: Eliminated distinction between Plan and non-plan spending; consolidated Railway and General Budgets; Advanced the Budget date, Introduced Zero-based, outcome and gender-based budgeting etc.
Taxation Reforms: Transparent Taxation – Honoring the honest Platform – Seamless, Faceless, Paperless, Reduce Tax litigations (Vivaad se Vishwas); Digitisation (E-Way Bill, TIN, e-Sahyog); Innovative taxation (Taxing Virtual Digital Assets)
Subsidy Reforms: DBT (PAHAL, PM Kisan Yojana), Public Financial Management System (PFMS); ‘Give it up’ campaign.

EXAMPLES/CASE STUDIES:

National: Public Financial Management System which offers a dependable and efficient real-time decision support platform; “Single Treasury Account” for central Ministries and departments.
Local level: GIS based property tax monitoring (Surat, Gujarat); Municipal Bond Market: Pune’s Pathbreaking Success to raise revenues.
International: Innovative Municipal Landfill Taxes (UK); Rationalising Fossil Fuel Subsidies via public information campaign and programme of cash and in-kind transfers (Indonesia).

CONCLUSION

Budget transparency, openness about policy intentions, evidence backed formulation, and implementation – is at the core of good governance agenda.
Budget reform has to go further, to incorporate a ‘multi-year time horizon’ & shift to outcome-linked expenditure management, as had been recommended by a committee headed by C Rangarajan in 2011.

GOVERNMENT BUDGETING: MICRO DIAGRAMS

LOW EQUILIGRIUM TRAP