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Union Budget 2023–24
Consolidation is necessary, but so is stimulus. The budget ably attempts both through gradual deficit reduction and better expenditure composition. But success also needs coordination with monetary policy and with states. Further, inflation-lowering supply-side action will enable countercyclical smoothing; stronger institutions and incentives can improve state capex and public service delivery.
The author thanks Pinaki Chakraborty for the invitation to write for this special issue and Shreeja Joy Velu for secretarial assistance. This article draws on and updates scholarly and media articles that the author has written on successive budgets through the years.
This article takes a long view of a budget that has itself taken a long view. It is unusual that a pre-election year budget works towards a sustainable future by reducing the share of subsidies and increasing that of investment. But does a deeper and more careful analysis support this widely shared judgment? The article derives some elements that effective budget-making requires, given India’s history, structure, political economy, as well as the global situation it finds itself in and examines the extent to which the budget can be expected to be effective. Will it contribute to mitigating traps that have led to poor implementation, rising deficits, and high debt ratios in the past? Will it help sustain higher growth rates? It then turns to budget initiatives and the data to assess the pattern of expenditure, the implementation record and prospects for the future.
The article begins with situating and analysing the budget in the domestic context followed by international situation. Further, it derives lessons for Indian budget-making and examines the past and present implementation.
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