To begin with, a budget is a plan that helps people manage their money by tracking how much they earn, spend, and save over a certain period of time.
In simple terms, the budget is a report where the government shares with Parliament (and the country) how it plans to manage its finances, covering income, spending, and borrowing. Understanding these terms makes it easier to follow how the government plans to spend the country’s money
Now India’s Budget is the government’s plan for how it will collect money (through taxes and other sources) and how it will spend that money on things like infrastructure, healthcare, education, and defense over the year.
Understanding the key terms used in India’s budget is crucial for making sense of the financial decisions that affect the country. Below are some essential budget terms explained in simple language:
A fiscal deficit occurs when the government’s income (like taxes) is less than its total spending. In this situation, the government has to borrow money to cover the gap. However, borrowing adds to the country’s debt, which the government must repay with interest. A fiscal deficit that is too high can be risky. For example, while the government aimed to lower the fiscal deficit to 2.5% of GDP in 2017, the pandemic caused it to rise. As of the current year, the fiscal deficit is 5.9%, but the government is aiming to reduce it next year.
The primary deficit is what’s left after subtracting interest payments on previous borrowings from the fiscal deficit. It gives a clearer picture of how much the government is borrowing to meet its current needs, excluding the burden of interest payments. A shrinking primary deficit suggests that the government is improving its financial health.
Once the budget has been discussed and approved, the government presents the Appropriation Bill in Parliament. This bill allows the government to withdraw money from the Consolidated Fund of India to cover the expenses approved in the budget for the year. Essentially, the government needs permission from Parliament to use the country’s money.
India matters. A potentially lucrative market, a growing knowledge economy, and a supplier of skilled professionals world over – the youth and the rising middle class are key ingredients of this story. And the 2024 budget reckons this! While employment, skilling and MSMEs take centre stage this year, one is struck by how the announcements build upon the solid foundation laid down over the last decade – digital penetration, financial inclusion, infrastructural development and achieving universal availability for basic amenities like housing, water, sanitation and energy. Poised to build on these advancements, the common theme across this year’s budget is unlocking India’s vast human capital to drive employment-led growth. Thrust to capital expenditure, schemes for enhancing credit accessibility to MSMEs specifically in manufacturing and the PM’s package of five schemes to enhance employment and employability are all steps in the right direction. But beyond what meets the eyes, there are many unheralded and yet important efforts that merit deeper discourse.
While always a top priority for this government, infrastructure development this time is being seen not just as a means to catalysing industrial expansion but as a pathway to securing livelihoods as well. A 116% increase in budgetary allocation on Women Safety on Public Road Transport from last year and plans to enhance workplace infrastructure like women’s hostel and creches are critical to unlocking their productive capacities. Additionally, dormitory-type rental accommodation for industrial workers should enhance their workforce participation and productivity. In line with enabling businesses from peri-urban and rural areas, the budget envisages a coverage of 25,000 rural habitations under the next phase of rural road expansion and the focus on last-mile connectivity through a 72% higher allocation on Works under Roads Wing from that of 2022-23. Impetus to digital infrastructure too is signalled by the budget through a significant increase in cyber security budget and consistently rising allocation to MeitY over the past five years. Allocation towards rural digital literacy programme under the capacity building component of Digital India is slated to further the participation of rural businesses in the digital economy.
While total allocation under the Export Promotion Schemes has come down, a number of announcements in the budget allude to enhancing export competitiveness, especially for MSMEs and labour-intensive industries. An outlay of 119.47 crore has been earmarked for SEZs with an objective to promote exports. The plans to set up e-commerce export hubs in partnership with private players will help plug MSMEs as well as local, traditional artisans already supported under the PM Vishwakarma scheme into the global value chains. Employment-linked incentive will lead to an overall reduction in labour costs while the credit guarantee scheme for MSMEs will help them scale up, thus enhancing their global competitiveness. The reduction of customs duty on products used as inputs in sectors like textile and leather and the extension of the PLI scheme to food processing sector, all of which are highly labour intensive and important from an export perspective are welcome steps.. These are particularly important as India has been losing out to more competitive countries in these sectors in the past few years. Finally, the focus on green energy transition for MSMEs will make them export competitive in the era of greening of supply chains. More importantly and in line with the Economic Survey, this will allow the government enough elbow room to follow its own emission reduction approach as opposed to the path foisted upon the developing countries by developed economies who are surely responsible for the present environment crisis and have so far shown extreme reluctance to bear the financial burden.
The budget for skill development and capacity building in each of the ministries have either remained the same or have been enhanced this time. This includes an increase in allotment for the skilling of minority women under PM VIKAS and a push to tribal enterprises under the PM Janjatiya Vikas Mission. The allocation of ₹1.48 lakh crore towards education and employment, the skilling scheme with the aim to train 20 lakh youth in the next five years, and the plans to upgrade 1000 Industrial Training Institutes will help create an industry ready workforce. These announcements alongside the provision of internship opportunities to 1 crore youth in the coming five years will not just enhance employment opportunities but also help firms access a skilled and productive labour pool by improving the employability of job seekers
Amongst the many hits, however, there a few misses. Focus on exports remains incomplete without adequate attention to standards and quality checks. Barring electronics and IT products, budgetary provisions for quality testing and certifications are found wanting. The budget does not talk about making available adequate support to MSMEs through knowledge resources or testing infrastructure in order to manufacture export-grade products. Contradictory to the government’s well stated objective of enhancing e-commerce exports, the allocation towards Postal Operations that entails infrastructural upgradation and setting up of Dakghar Niryat Kendras for e-commerce exports has been significantly reduced. Furthermore, despite the budget’s emphasis on MSMEs as growth catalysts and job creators, little has been said about improving their ease of doing business. The insurmountable compliances and regulatory burdens faced by small and medium enterprises in their quotidian activities continue to plague their competitiveness in the global markets and hinder their expansion plans. In addition to delivering on the budget promises, it will be important to keep these in mind as the government plans to carve a path of growth built on harnessing India’s significant demographic advantages and the country’s true productive capacity.
Furthermore, the budget offers BBA students a comprehensive view of various business functions, including marketing, operations, and human resources. For instance, understanding how budgetary decisions influence marketing strategies can illuminate the importance of cost management and return on investment (ROI). Familiarity with budget-related terminology—such as capital expenditure, operating expenses, and cash flow—enhances their financial literacy, equipping them to make informed decisions in their future careers. Ultimately, a solid understanding of budgeting not only prepares BBA students for successful managerial roles but also deepens their appreciation for the financial frameworks that drive business success in dynamic economic environments and landscapes.
(The author is grateful to Dr. Rajiv Kumar, Chairman, Pahle India Foundation and Former Vice Chairman, NITI Aayog for his feedback)
– Sakshi Abrol
Visiting Fellow at Pahle India Foundation & Doctoral Researcher, University of Bonn
Rashtram PBC 2018 Alum
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