Budget 2023: Lok Sabha elections next year… Will Jaitley’s bet work for Nirmala Sitharaman?

New Delhi: Budget has never touched politics. A popular budget is always expected before elections. This year many states have assembly elections. Then there is the Lok Sabha elections next year. In such a situation it is not difficult to imagine what Finance Minister Nirmala Sitharaman’s upcoming budget will look like. Hopefully it will focus on the common man. The government will try to directly benefit them through all kinds of policy decisions. Remember Union Budget 2018-19. In view of the 2019 Lok Sabha elections, then Finance Minister Arun Jaitley presented a rural-centric budget. Jaitley’s vision was very clear. He wanted to strengthen the foothold of the Bharatiya Janata Party (BJP) in the villages. Therefore, he devoted all his energies to agriculture and rural infrastructure. A huge amount has been allocated in the budget for this. The then finance minister P Chidambaram made the same bet while presenting the UPA government’s last full budget before the 2014 general elections. He then increased the scope of the tax exemption. People with income less than 5 lakhs have got a big relief through this. Nirmala Sitharaman will present the last full budget of the second Modi government on February 1. It remains to be seen whether Sitharaman plays the bet of Jaitley and Chidambaram in such a situation or has some other arrow in his quiver.

This budget comes during the election season. This year, there are assembly elections in many important states like Karnataka, Madhya Pradesh, Chhattisgarh, Rajasthan, Telangana. Lok Sabha elections are likely to be held in April-May next year. In such a situation, Nirmala Sitharaman will face many challenges. She cannot ignore politics. It is expected that they will present such a budget which will send a ‘feel good’ message politically. Only vote on account will be introduced next year. A complete budget will be presented after the new government takes office.

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Looking at the current situation in the world, one thing is clear. To sustain the economic boom, the government needs to significantly increase spending on infrastructure. The responsibility for this rests entirely on the shoulders of the government. Because the private sector keeps their pockets safe. Going by past trends, the government’s capital expenditure in Budget 2023-24 could be Rs 9.75 lakh crore. In 2022-23, it was Rs 7.5 lakh crore.

Sitharaman has no way
Sitharaman has no choice. He needs to increase spending with a populist budget. Chartered Accountant Gaurav Kesharwani says additional standard deduction should be given to Sitharaman in the coming budget. This will save some money in the hands of taxpayers who fall in the lower bracket. Capex allocation also needs to be increased. This will increase consumption in the economy in many ways. In last year’s budget, Sitharaman had increased capital expenditure by over 35 percent. It has been raised to 7.5 lakh crores. At this point, the finance minister hopes to keep inflation under control and maintain economic growth. In this case, it is a very difficult challenge.

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Sitharaman has chances to attract voters
Sitharaman has no dearth of arrows in his quiver to woo voters. She can target lower middle class taxpayers. For this the income tax rates can be reduced or the slab adjusted. Apart from this, the Finance Minister can increase the allocation for MNREGA. A second option is to announce a similar scheme for the poor. The third thing she can do is to announce mega projects in poll-bound states. This will help create the atmosphere. These groups can also be appeased by announcing concessions to farmers, small traders and other sections. Sitharaman’s upcoming budget should have something for every segment. This budget itself will set the stage for the Modi government in the Assembly and Lok Sabha elections. In such a scenario, Sitharaman will have to bowl every ball very carefully.

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