The Government of India unveiled its union budget 2024-25 on February 1 as per its budget calendar. This is an interim budget and the full-fledged budget will be unveiled following the general elections. The budget is presented as a reflection of the last 10 years of the Bharatiya Janata Party (BJP) in power. The economic survey, an integral publication of the budget was not unveiled, however, the publication ‘Indian Economy: A Review’ was made public. Subsequently, Finance Minister Nirmala Sitharaman announced the government will issue a whitepaper which will compare the 10 years of BJP-led governance with the previous UPA government.
As the budget has come in the form of vote on account, it has not introduced major interventions this time like in the previous years. The budget has set ambitious targets for housing, health, insurance and three major corridors – energy, minerals and cement corridor; a port connectivity corridor known as Rail Sagar; and a high-traffic density corridor like the major connectivity drives in the past under Bharatmala project. These three corridors introduced in the budget are expected to leverage the Indian economy to achieve its goal.
The Government of India has envisioned to be the third biggest global economy in the next three years and a developed country (Vikashit Bharat) by 2047 with an aim of growing to a 7-trillion-USD economy.
This budget has laid emphasis on collaboration between the Union government and State governments by providing authority to State governments in fiscal matters under the leadership of the Union government. It has assumed that fiscal policy has a leading role to accelerate economic growth and concentrates on mobilising public spending in physical infrastructure and private sector development to achieve the target of ‘Vikashit Bharat’ overlooking the provision of Fiscal Responsibility Budget Management Act (FRBM), which has given a target to maintain fiscal deficit below 3%. In this regard, the fiscal policy is quite expansionary, which has prioritised skill development and jobs despite the budget not being explicit due to its interim nature. Further, it has given high priority to the Prime Minister Gati Shakti (National Master Plan for Multi-modal Connectivity), which has laid emphasis on the coordinated implementation of infrastructure connectivity projects.
In this context, Nepal can learn lessons for continuous focus on infrastructure development like how India has been massively spending on airports, ports, metro rail and railways, bridges, express highways and flyovers, among others that has accelerated the Indian economy and played a crucial role in private sector development.
Second, welfare programmes should be given due priority, like how the Indian budget has announced to develop housing projects for deprived people along with health and education facilities. It will boost the confidence of the people by protecting the vulnerable communities. People-centric programmes should be aligned with physical infrastructure and entrepreneurship development.
Third, the Government of India has been promoting Small and Medium Enterprises (SMEs), which can be a lesson for Nepal. The Indian government has set up various funds – agriculture development fund and fintech fund, among others – to promote SMEs, in which the Union Government also allocates funds and has also opened up for mobilising funds from development partners. This has helped in developing the private sector by fostering entrepreneurship in a major way.
Fourth, the Government of India has been working in a big way to improve the investment climate based on 10 major indicators identified in the Ease of Doing Business of the World Bank Group. Though the World Bank Group has discontinued its publication but these 10 major indicators – starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency – provide a base for improving the investment climate. Nepal should focus on minimising the cost of doing business by initiating reforms through the budget and through other instruments.
Fifth, India has been continuing its focus on marginalised communities through the announcement of different programmes, which play a crucial role in bringing them to the mainstream. Such programmes make marginalised communities feel that the government is accountable and relevant to them and they can rely on the government.
Sixth, the Indian budget reflects the government’s assurance of implementation. Any programme that is announced by the government like Jan-Dhan Yojana, crop insurance and others are duly implemented within the given timeline. The Government of Nepal should learn a lesson that programmes focused on vulnerable people should be given a guarantee by making announcements through the budget and also enhance the credibility of the budget through guarantee of implementation.
Mr. Nara Bahadur Thapa is the Former Executive Director, Nepal Rastra Bank.
