Union Budget 2023: Growth rate to be achieved at the rate of 7% in the year 2024, structural reform in the budget is necessary
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New Delhi : Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2023-24 in Parliament on February 1. It is expected that in this budget, there is a need to focus on structural reforms for India’s Gross Domestic Product (GDP) growth. According to media reports, India’s GDP growth for the financial year 2023-24 has been estimated by various agencies from 5.7 percent to 6.6 percent. At present, manufacturing growth and current account deficit (CAD) have not been as expected. Therefore, the growth estimate for the financial year 2023-24 may be revised. However, to solve the employment crisis, India should grow at more than 7 per cent in FY 2023-24 and 8 per cent in 2024-25. If experts are to be believed, in order to achieve this projected target for GDP growth, the government needs to announce several structural reforms in this year’s budget like in the budget of 1991.
GFCF boosted by structural reforms
Simultaneously, experts also say that such reforms should help in restoring the investment (GFCF) ratio of 33.7 per cent of GDP, as it did during 2010-13. Cad GDP was below 1.2 percent during this period. In addition, the budget allocation for capital expenditure is increasing, but it is not possible for any government to bear the full burden of investment on budgetary resources. However, the infrastructure allocation in the budget can be increased by four to five times under PPP (Public Private Partnership).
Corporatisation of departments in the infrastructure sector
Experts say, however, that departments and corporations that spend on infrastructure, such as the Railways, NHIDCL, NHIA, etc., can be corporatized and listed as public entities. Simultaneously, their assets can be revalued and converted into equity and debt in a suitable mix through a special act. After this, they can easily raise loans from the capital market and lenders without burdening the budgetary resources of public units. However, budgetary support may be provided for infrastructure for viable projects such as rural and irrigation infrastructure, health, education, sanitation and drinking water etc.
Announcement on Trade and Taxation Measures
Apart from this, several measures of trade and taxation laws can be announced in the budget to encourage private investment. Criminalization of business and taxation laws should be reviewed and replaced with civil penalties. Simultaneously, unrealistic and high tax demands and net worth should be reduced and controlled. This will reduce the long running cases. These constraints have increased business risks.
British colonial shackles must be broken
Experts also say that India must triumph by breaking the British colonial shackles and rekindle the spirit of entrepreneurship. He said that for projects up to Rs 1000 crore, environmental approval can be relaxed and land, water and clearances can be expedited. It is expected that the onerous mining laws may be relaxed, which will give a boost to the core industries that encourage the high growth regime.
Need to speed up bank loans
According to a report, during the year 2022, gross bank credit in India has hardly reached the level of 47.6 per cent of GDP, while it is 89 per cent globally and about 160 per cent in China. In the last years it has been between 50 to 55 per cent. In the budget it should be increased to at least 60 per cent of GDP and to about 75 per cent in the next three-four years. In addition, there is a need for generous bank credit for private investment. Temporary loss and business risk are possible in a developing country. Hence shifting the entire burden on banks and entrepreneurs along with stringent NPA norms has become counter-productive. Hence in that sense the NPA norms should be relaxed and loan restructuring should be allowed liberally till India becomes a developed country.
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