Finance Minister Addresses Global Risks and Domestic Stability in Budget Outlook
In a comprehensive post-Budget interview, the Finance Minister of India provided detailed insights into the economic assumptions, challenges, and strategic priorities shaping the nation's fiscal policy. The discussion covered a wide range of topics from global uncertainties to domestic reforms, offering a clear perspective on the government's approach to sustainable growth.
External Challenges Dominate Economic Concerns
The Finance Minister emphasized that the primary risk to India's growth assumptions stems from the global situation rather than domestic factors. Domestic conditions remain well-managed, with supply-side issues and inflation under control. Consumption has received a significant boost, as evidenced by sustained GST collections that continue to yield positive results. However, the external environment presents ongoing challenges that require careful navigation.
When questioned about potential trade deal developments with the United States, the Minister maintained a pragmatic stance, noting that such agreements evolve on their own timeline and are not central to immediate planning assumptions.
Budget-Making in an Evolving World
Reflecting on nine Budget presentations, the Finance Minister acknowledged that each fiscal exercise brings unique challenges. The COVID-19 pandemic introduced unprecedented difficulties, while the post-revival phase required innovative strategies to accelerate and sustain growth. Global uncertainties add complexity, but Budget-making has consistently adapted to changing circumstances while maintaining fiscal discipline.
Tax Reforms and Fiscal Realism
The interview revealed several key aspects of the government's tax strategy:
- Expanding the Tax Base: The government plans to leverage AI-driven data analytics to identify spending patterns and match them with tax filings. This approach will include nudges for non-filers and continued emphasis on linking TDS to significant expenditures.
- Support for Small Taxpayers: Through collaborations with professional institutes, the government will establish "Tax Mitras" to assist small businesses with affordable compliance services, building confidence in the tax system.
- Decriminalisation of Tax Laws: Major reforms include limiting imprisonment to maximum two years with no rigorous imprisonment for most offences. The judiciary will determine penalties based on offence gravity, with options for fee payments instead of jail time in many cases.
Youth-Centric Initiatives and Skill Development
The Budget's focus on youth empowerment stems from extensive consultations, including the Prime Minister's My Bharat dialogue. Key initiatives include:
- Establishment of a standing committee for education, skilling, and entrepreneurship
- Integration of skill acquisition with formal education
- Support for women entrepreneurs through programs like Lakhpati Didis and SHE-Marts
- Development of waterways and coastal infrastructure creating youth employment opportunities
The orange economy will receive special attention, focusing on animation, visual effects, gaming, and cartoon videography. This sector development aims to prepare India's workforce for future opportunities while addressing emerging skill gaps in areas like geriatric care through additional Allied Health Professionals.
Investment Climate and Financial Sector Reforms
The Finance Minister noted encouraging signs of private sector investment recovery, supported by India's robust domestic market and export performance. Regarding financial markets:
- The STT hike in F&O trading aims to protect retail investors from excessive speculation
- Capital gains tax on sovereign gold bonds purchased from secondary markets reinforces the original intent of long-term holding
- REITs by central PSUs will form part of the asset monetization strategy, with pension funds showing confidence in this instrument
Federal Relations and Social Security
Addressing concerns about state-specific allocations, the Minister highlighted development corridors for Kerala and Tamil Nadu, including mineral and rare earth corridors. The substantial allocation for employment guarantee schemes demonstrates commitment to demand-driven job creation, with both central and state governments sharing responsibility for implementation.
Looking Ahead: Reforms and Global Positioning
The Finance Minister emphasized that reforms extend beyond the Budget, citing labour codes, IBC, and GST as examples of ongoing transformation. While acknowledging global factors affecting FDI flows, the government continues working to make India an attractive investment destination through systemic improvements and international partnerships.
As India prepares for future challenges, the focus remains on strengthening macroeconomic fundamentals, expanding the tax base through technology, and creating opportunities for the youth population. Each Budget represents a step toward the 2047 vision, with current policies designed to build resilience against global uncertainties while fostering inclusive domestic growth.
