Walking the Tightrope An Analysis of Union Budget 2023 24

The Budget was also being closely followed for the vision that the Finance Minister would outline for dealing with the impending recession, the fallout of the Russia-Ukraine war and the reopening of schools and addressing falling educaonal indicators, exacerbated by the learning losses caused by the pandemic. [...] However, problems associated with scheme and policy design, implementaon, and underulisaon of funds are some of the persistent issues that need to be addressed in order to enhance the impact of the Union Budget on the marginalised secons of the populaon. [...] Impact of the Union Budget on States' Finances Given the vercal imbalance between the Union and the State Governments in terms of resources and responsibilies, the Indian Constuon envisaged a system under which tax collecon raised by the Union Government is to be shared with the States based on the recommendaons of finance commissions. [...] Need for More Transparency on the Producon Linked Incenve Scheme In 2020, the Union Government announced the launch of the Producon Linked Incenve (PLI) scheme¹³ under which manufacturing of goods in the electronics sector are to receive financial incenve to the tune of 4-6 per cent of sale value. [...] We may note here that the sharp increase in the size of the Union Budget as a proporon of the GDP during the pandemic years was largely due to the clearing of outstanding dues (relang to food and ferliser subsidy), a relavely large amount of erstwhile 'off-budget' expenditure being reported as part of the Union Government's expenditure (for improving fiscal transparency of the government), and the.