Swaraat / Pattukottai Balaraman
When the former Finance Minister Sri P Chidambaram alleged that the budget estimates can be achieved only by magic rather than a mathematical realistic projections , the undersigned could not ignore the point as Sri Chidambaram s experience in finance ministry is well known as a seasoned economist.He also mentioned the buoyancy in revenue cannot be triggered by foregone revenue collections due to increase of Income Tax Hike from seven lakhs to twelve lakhs.
Unlike, in our families where we make both ends meets by restricting our expenditure within our income, The country s budget is the other way around. The Government projects its expenditure for both revenue and capital outlays including various social education , health and other schemes besides infrastructure projects. The deficit is met by borrowings. The deficit is restricted to a percentage of GDP say around four percent.
The lesser the percentage of deficit the better managed.Till date, no budget document clearly portrays what is budget vs actuals. However , the actuals of earlier years are clearly given in budget documents.A broad analysis since 2018/2019 clearly depicts that budget revenue and expenditure has been increasing steadily around ten percent.The GDP estimates was around ten percent except in the year 21/22 where the projection was 14.4 percent and 22/23 it was 11.1.
Similarly , the actual revenue targets and expenditure targets were achieved by and large except in the years 19/20 and 20/21 where the budget estimates fell short of around twenty five percentage points. The revenue and fiscal deficits also shot up to 3.3 and 4.6 as against projected 2.3 and 3.3 respectively for the year 19.20 and in 2020/2021 it shot up to 7.3 and 9.2 as against budget estimates of 2.7 and 3.5 respectively. This indicates the overall economy shrunk with total revenue and expenditure contracted and consequentially deficits burgeoned. On a superficial look one may conclude the projections were awfully wrong. However, if we look at those years these two are corona years and lockdown was clamped after the budget was presented for 2020/21.
Therefore, nobody can blame for an unexpected global event for estimates going awry. On the contrary, we have to note the Government’s response and steps on various fronts right from MSME financing , NPA reschedulements, reduction in interest rates, soft loans and also capital infusions. The year 2021/22 was a bumper year and that is why discounting the base effect GDP was projected at 14.8 percent and the revenue grew at about twenty five percent as compared to the budget.
Over the years the revenue projections are around ten to fifteen percent and are being achieved regularly.The figures speak for themselves. The budgeted total revenue from ,21/22 to 22/26 has been steadily increasing by about fifteen to twenty percent. If these are mere random projections, actuals would have been with much less variations.
Fortunately , these have been comfortably achieved. At the most one may have grouse that expenditure targets have not been marginally met in 23/24. These are very marginal and only when we get actual figures we would be able to fathom the reasons for this .Notwithstanding this minor aberration, the deficit figures are well under control.
In this backdrop, the budget and actual figures actually culled out from Goverment of India official website are very realistic and being achieved without much variations year on year, except two corona years which was well recouped in the succeeding year/s.One needs to commend the Government that unlike other global economies our economy bounced back with great resilience , thanks to appropriate measures taken then and there.
Therefore , the projection of around ten percent of revenue target from Rs 31.29 lakhs crores to Rs 34.2 lakhs crores appears achievable going by past estimates, actuals and economic surveys.When former Finance minister blames the current Finance Minister that it is magical estimates and not realistic ,he is apparently donning the hat of opposition rather than a seasoned economist.
The other allegations are just a figment of imagination from him. We can safely conclude that the projections by Finance Minister Ms. Nirmala Sitharaman is not conservative but realistic.
At the most one may have some grievance within the revenue sources and expenditure outlays.In fact the Government should come out with an analysis of budget vs actuals of past ten years and clear the air of any qualms which may exist whatsoever..We commend the BJP Government especially Finance Minister Ms. Nirmala Sitharaman in this regard
Excellent. Thanks
Thanks. Excellent