Interim Budget 2024-2025: A Needonomics Perspective on Economic Challenges

*Professor M.M. Goel
In the realm of economic performance indicators, the  Interim Budget 2024-2025  presented by Finance Minister Nirmala Sitaraman stands as a crucial step towards charting the course for Viksit Bharat towards 2047. Referred to as a Vote-on-Account, this budget serves as a precursor to the regular union budget scheduled for July 2024, aligning with the election year with hope and optimism. The encouragement to wealth creators is appreciable but  we must emphasize the importance of ethical and altruistic practices, in line with Gita-based Needonomics principles. The focus should be on quality indicators that benefit the masses rather than specific classes.

Pointing out the goal of all-round and inclusive development of the Indian economy in the spirit of ‘Reform, Perform, Transform’, the FM presented the Interim Budget 2024 is not the last budget with hope till July.

The government should be praised that even before the Lok Sabha elections, populist schemes and new announcements have been avoided in this budget and the changes that have taken place in the economy in the last 10 years have been talked about, although the size of the economy has changed a lot in the last 10 years. It has increased but in this big economy there is no talk of distributive justice in the budget.

It is a pleasant feeling that now the expenditure on infrastructure development has increased by 10% from last year’s Rs 10 lakh crore to Rs 11.11 lakh crore, which will boost production and new employment generation by increasing effective demand. In this sequence, building three big economic railway corridors, connecting 40,000 bogies to Vande Bharat, developing tourist centers for tourism in the states, today will definitely increase the pace of the economy by promoting capital creation, but how and till when – the questions were not answered.

Building 2 crore new houses under Pradhan Mantri Awas Yojana, Lakhpati Didi Yojana, Cervical Cancer Vaccine Scheme for girls aged 9 to 14 years, strengthens the claim of self-reliant India and gender equality, but it hinders the target of fiscal deficit and budget deficit .
Promotion of electric vehicles and establishment of new cement industries are steps to encourage energy conservation and higher growth rate in the country, but the lack of mention of funding for these is disappointing and when there is no time limit for them and elections are round the corner. Are these just announcements or is the government fully confident of forming the government again and will continue these in the full budget.

One disappointing aspect of this interim budget is that it includes  unemployed students, farmers, middle class and householders who have not directly received anything. No change in the tax slab for salaried class. Employment for the unemployed. lack of new industrialization, when the new education policy for students comes out as a product, there is a question about its acceptability in the market and the government’s needs. The absence of mention of Samman Nidhi, crop insurance scheme and research shows that this is an interim budget and not a full budget. Not providing relief from inflation also indicates the same thing.

Being a Needonomist, my concern is about the fiscal deficit which has not yet achieved the target of 4.5% under FRBM Act it should be below 3%.Also, the equation and picture of where the money comes from and where it goes is not very encouraging. Even today, expenditure of 20 per cent on interest payments on one rupee is non-productive. No effort was made to reduce it. At the same time, maximum 28 percent of the receipts in one rupee are from loans and other liabilities, which is increasing the economic burden on the economy.

The narrative underscores the economic challenges faced by the public, including unemployment, inflation, tax-GDP ratio, and excise duty on petrol and diesel. We have to acknowledge the significance of maintaining a positive unemployment rate, ideally between 3-5%, and the need to address the alarming 7% unemployment rate in India.

The ambitious economic goal of achieving a $5 trillion economy by 2027 and securing the top spot globally in GDP by 2047 is discussed, with a call to harness the demographic dividend that began in 2000 and is expected to conclude by 2050.
In addressing inflation, the historical trend of India accepting an inflation range of 2-6%, posing a threat to the well-being of the masses. The tax-GDP ratio, a crucial economic indicator, falls short of the recommended 15% by the World Bank, emphasizing India’s failure in achieving a healthy ratio.

Rising fuel prices further burden the public and the excise duty trends on petrol and diesel are scrutinized, calling for decisive steps from the government.

We must acknowledge the government’s efforts to address inflation through fiscal policy measures, emphasizing the need for careful economic management given India’s public debt-to-GDP ratio exceeding 80% and concerns of it surpassing 100%.

Recommendations for the education and healthcare sectors include upgrading the “right to education” to “right to equal education” and enhancing the implementation of the 25% quota for Economically Weaker Sections. In healthcare, Professor Goel proposes integrating health insurance with Aadhaar cards and issuing a universal cash card for cashless health services.

The piece concludes by emphasizing the importance of Needo-consumption as the driver of economic growth and calls for a focus on the quality of growth over the quantity of GDP. Professor Goel advocates for job creation, reducing inequalities, addressing declining FLPR, and encouraging economic empowerment and freedom for the masses.

To sum up, the interim Budget 2024-25  is meant to enable the government to continue its work for three-four months – not to fulfill expectations. In this sense, it is a purely democratic budget without announcement of balanced populist schemes.

*Professor M.M. Goel is the Propounder of the Needonomics School of Thought, Former Vice-Chancellor of Starex University, Jagannath University Jaipur, RGNIYD (GOI), and Superannuated Professor of Kurukshetra University (Haryana).