How Good Is Budget 2023?

Critics have questioned the credibility of fiscal math in the recent Union Budget and prioritising capital expenditure over welfare spending. Are they right?

- Puja Mehra

The Union Budget presented by finance minister Nirmala Sitharaman on February 1 has generated two types of responses. The first set finds it to be a very good budget. This narrative is excited about the budget resisting the temptation for populism ahead of the Lok Sabha election year, 2024, and fiscal adventurism of appeasement giveaways and sops or what prime minister Narendra Modi has called ‘revadis’ (a type of North Indian sweet). This set has praised the budget’s focus instead on using the available fiscal space for doing two things: one, reducing the fiscal deficit, which roughly can be understood as the difference between the government’s revenues and expenditure; and two, increasing allocations for capital expenditure on infrastructure development, particularly railways and roads, etc.

The second set is of responses that are skeptical. It includes questions over the credibility of the fiscal math and the suggestion that the budget numbers have been creatively prepared, and if it is wise to prioritise allocations for capital expenditure on infrastructure instead of welfare spending.

Is all the criticism valid?

First, the fiscal math does seem credible and devoid of creative numbers of the sort seen in past budgets, such as P Chidambaram’s last budget before the 2014 Lok Sabha election. The tax-collection projections are not unreasonably overoptimistic, as was the case in the budget presented by Piyush Goyal ahead of the Lok Sabha elections in 2019.