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.
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.
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.