Union finance minister Nirmala Sitharaman presented the interim budget in the parliament today, which is the last budget of the 2nd Modi government. Ahead of the budget, the ministry published a note on the Indian economy, showing how much the economy has progressed in 10 years during the Modi government. The comparisons of numbers from the interim budget of 2014 and the current interim budget show a massive difference between the two budgets, both after 10 years of rules of UPA and NDA govts.
A study of the 2014 interim budget shows means and measures to hide the real state of the economy and artificially boost numbers. On the other hand, the 2024 interim budget has shown that India is the best-managed large economy in the world, well on track to become a $5 trillion economy.
Not only Modi government accelerated the growth of the economy, but the govt also absorbed the deferred liabilities of the previous UPA government. In order to show the numbers in good light, the Dr Manmohan Singh government had pushed payments of subsides on Oil and fertilizers amounting to ₹35,000 crore for the year 2013-14 to the next year, which artificially reduced the deficit of the UPA govt. But this played havoc with cash flow of the related companies, destroying growth.
In the 2014 interim budget, Finance Minister P Chidambaram had reduced plan expenditure by ₹80,000 crore, again to manage deficit. This meant that essentially all productive investment was killed. The payments to all infrastructure and other companies were put on halt, to reduce expenses in the govt books. As a result, growth in the economy stalled. Numbers show that only ₹8,000 crore was spent in January to March 2014, against the usual spent of ₹85,000 crore.
Between 2005 to 2014, the capital expenditure of the government fell from 23% to a mere 14%. This resulted in the stalling of job growth.
On the other hand, the interim budget presented by Nirmala Sitharaman show a massive increase in capital expenditure under the Modi government, firing the growth engine. Capex is on a record high and continuously increasing. Effective overall capex is ₹15 Lakh crore now, and ₹11.1 crore of it is only on Infrastructure development like roads, railways, ports etc.
The last 10 years of NDA have been high growth and high job and employment generating years. Moreover, there are no ‘Sleight of Hand’ in the budget to hide expenses to artificially show a better economy.
India was 10th largest economy in terms of GDP in nominal terms in 2014, and now the country is 5th largest economy. FDI inflows have more than doubled from $304.03 billion to $642.21 billion. Individual’s weighted mean income as per income tax returns have gone up from ₹3.1 lakh to ₹11.6 lakh. The consumer price inflation has gone down from 10.08% in 2013 to 5.65% in 2023.
With the growth in economy, the income tax burden has also come down for individuals. The effective tax rate was 19.22 % for income upto ₹15 lakh in 2013, and now it is 10.4%, almost half.
