GDP growth
Intent: The budget document is vital to understand GDP growth expected for the next year. The budget is presented two months prior to the start of the next financial year (2024-25) and within a month of the first estimate for the current year (2023-24). Higher growth estimates can mask higher deficit numbers, which are expressed as a share of nominal GDP.
Delivery:
- In 7 of the last 10 years, actual GDP growth has been less than the projected GDP numbers, especially in pre-covid years.
- The first estimate for 2023-24 is much lower than budgeted numbers. This could potentially impact tax buoyancy—and collections.
1.6 percentage points: The budgeted increase in nominal GDP growth in 2024-25, as compared to the advance estimates of 2023-24.
Fiscal deficit
Intent: Fiscal deficit measures how much the government is spending beyond its means. For a resource-starved country like India, fiscal deficit is inevitable. Question is how much is manageable. Back in 2016-17, a government panel had recommended a “glide path” to 2.5% of GDP, but covid changed that.
Delivery:
- The covid crisis made it a must for the government to spend big, blowing up the deficit. The government is now working towards a fiscal deficit target of below 4.5% by 2025-26.
- For 2024-25, the government has projected a fiscal deficit of 5.1%, lower than the revised estimate of 5.8% for 2023-24.
₹3.9 trillion: The amount by which the fiscal deficit exceeded the Centre’s tax revenues in 2020-21, the year when covid-19 hit.
PLI scheme
Intent: The productivity-linked incentive (PLI) scheme is the largest, and most ambitious, such programme to attract manufacturing to India in recent years. With a multi-year outlay of ₹1.97 trillion, it aims to subsidize domestic manufacturing by companies across a range of sectors, including IT hardware, auto, pharma, battery technology and drones.
Delivery:
- Announced in February 2021, the actual expenditure through the budget under the scheme has been ₹10,820 crore, mostly in 2023-24.
- ₹930 crore has been budgeted in 2024-25 under the PLI scheme for spending in the large-scale electronics and IT hardware sector.
5%: The actual amount spent under the PLI scheme ( ₹10,820 crore) till 2023-24, versus the planned outlay ( ₹1.97 trillion).
Capital expenditure
Intent: A stated intention of this government, especially post-covid, has been to do ‘good spending’—investments that have a trickle-down effect on other parts of the economy immediately and yield economic effects for years to come. For example, building new assets like roads, railway lines and ports.
Delivery:
- Compared to 2014-15, capital expenditure increased about five-fold to ₹9.5 trillion in 2023-24. This increase has been especially sharp post-covid.
- Barring two years, 2014-15 and 2017-18, actual capital expenditure for other years in this decadal period has exceeded 90% of the budgeted amount.
8 percentage points: The fall in private investments between 2011 and 2020, from 31% of GDP to 23%, as per World Bank. The latest figure is 25% for 2021.
Welfare spending
Intent: For a poor country like India, targeted welfare spending becomes an imperative. During covid-19, welfare schemes brought a lot of relief, and also gained greater social, and political, legitimacy as a fiscal intervention. The challenge for all governments has been effective implementation on the ground and ensuring scheme benefits flow to intended beneficiaries.
Delivery:
- In pre-covid years, including those before the 2019 election, spending on welfare schemes fell well short of budgeted amounts. During covid, this changed.
- For 2023-24, however, that excess has turned into a deficit, with revised estimates pegged at ₹0.4 trillion below budget estimates
4.7%: Increase in the budgeted spend on welfare schemes for 2024-25, over revised estimates of 2023-24.
Income tax collections
Intent: Personal income tax collections are a strong index of overall GDP growth. At the same time, much of the working population is not covered by income tax as most work in informal occupations and/or fall well below the minimum tax threshold. The government has, over the years, attempted to expand the income tax net.
Delivery:
- The past decade has seen collections grow an average annual 16%, amid two distinct periods. Pre- covid and during covid, collections usually trailed budgeted amounts.
- Post-covid, income tax collections have exceeded budget estimates by 13-24%. For 2024-25, a year-on-year increase of 13% is projected.
(-)24%: The shortfall in collections during 2020-21 as compared to the budgeted amount, due to the economic effects of covid lockdowns.
Total tax collections
Intent: Tax collections are the main revenue source for the government. The higher the tax collections, the more the government has to spend. After covid-19 caused a major hit to government finances, a primary aim of the government has been to create conditions for tax revenues to bounce back.
Delivery:
- Pre-covid, tax estimates were either missed or just about met. After falling short by 18% in 2019-20 and 16% in 2020-21, collections smashed estimates in the next two years.
- The NSO’s advance estimates for 2023-24 show personal consumption growing at 4.4%, the slowest pace in many years. This will almost certainly lead to a lower pace of tax collections.
11.3%: The increase in tax revenues budgeted for 2024-25—lower than the revised growth estimate of 12.8% for 2023-24.
PSU disinvestment
Intent: Early on in its first stint, this government said it believed the government had no role to play in businesses of a non-essential nature, adding it would pursue a strong disinvestment agenda. It wouldn’t just be in the nature of small stake sales, but would extend to outright sale of companies and banks.
Delivery:
- Till 2018-19, it pursued that agenda with vigour, though several were ‘forced’ mergers between its own companies—like ONGC buying the Centre’s stake in HPCL.
- Some additional successes were the sale of Air India and taking LIC public. But post-2020, disinvestment in the truest sense has been on the backburner.
12.2%: Average annual return in the past 10 years given by the BSE PSU Index, against 13.5% from the benchmark BSE Sensex.
MGNREGS
Intent: When it assumed power, the government saw a shrinking role for the Mahatma Gandhi National Rural Employment Guarantee Scheme, which assures employment of 100 days a year to rural households. But challenges in new jobs and agriculture, multiplied by covid-19, saw the MGNREGS envelope expand continuously.
Delivery:
- Barring 2014-15, the government ended up spending more in MGNREGS than what it initially budgeted in all other years.
- 2023-24 was the first time during this period that the government cut its estimate from a year ago, though it is now expected to overspend by 43%.
₹1.11 trillion: Amount spent under MGNREGS in 2020-21, the first covid year, which is 81% more than the budgeted ₹61,500 crore.
Government jobs
Intent: Perhaps, the biggest challenge for the economy is the creation of new jobs, especially at lower levels of skills and experience, and all efforts towards that end count. As of March 2023, the centre employed about 3.17 million people. It also has a lot of vacancies, which it promised to fill on a “Mission Mode via Rozgar Melas (employment fairs)”.
Delivery:
- Between March 2015 and March 2023, employee strength of the central government actually shrunk by about 139,000.
- For March 2025, the centre has projected an employee strength of 3.51 million, against 3.45 million in March 2023.
964,359: Number of vacant posts in government departments as on 1 March 2022, as per the government’s own figures.
Health insurance
Intent: Large out-of-pocket medical expenditure can tip the vulnerable back into poverty. Launched in September 2018, Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY) provides annual health cover of ₹5 lakh per family for secondary and tertiary care hospitalization to the poor and the vulnerable.
Delivery:
- Half of India’s estimated population of 1.4 billion is eligible to enrol under this scheme. By comparison, around 300 million beneficiary cards have been issued.
- Actual expenditure for the first three full financial years was less than half the budgeted amount. It picked up after that.
62 million: Cumulative hospital admissions under the scheme since launch.
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