A peek into the Modi government's (likely) budget 2023 - CNES Infosphere

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published Published on Jan 20, 2023   modified Modified on Jan 20, 2023

- Deepanshu Mohan, Soumya Marri, Bilquis Calcuttawala, Malhaar Kasodekar, Aniruddh Bhaskaran and Hemang Sharma

A pre-budget deep dive by the Centre for New Economic Studies (CNES) Infosphere team has come up with some interesting takeaways. The analysis has looked at past macroeconomic and budget trends to set the tone for Budget 2023-24. They do this by looking at capital and revenue expenditure, sectoral analysis of budget expenditure and a scheme-wise allocation of resources.

Capital vs Revenue expenditure: This is a breakdown of whether new assets are being, created through capital expenditure (roads, ports, schools, hospitals) or for yearly functioning (salaries, pensions, interest payment). Capital expenditure budgeted spending has constantly increased over the years, with a projected increase for the 2023 budget as well. The increase in capital expenditure is said to offset the slump caused by COVID, invest in schemes for the long term (like PMJAY) and boost demand in the economy. 

In the second instance, the analysis on sectoral spending reveals that public expenditure on healthcare has been around 1.2% of GDP since 2014, except in 2020-21, when it rose to above 2% due to the Covid-19 pandemic. In comparison to other countries, it is very low. For instance Japan spends around 9% and Brazil spends around 4%. The expenditure on Medical, Public Health and Family Welfare, for the past three years, is seen highest in Delhi. In terms of aggregate expenditure, the majority of the states stand at roughly 5% of aggregate state expenditure. 

The Union government's expenditure on education has been around 3% since 2014. In comparison to the government before 2014, expenditure has decreased from a peak of
3.36% in 2012-13 to a low of 2.84 in 2014-15. Again, in comparison to other countries it is low. The USA spends roughly 6% and France spends 5.2%. Moreover, even in relation to India’s population, the current spending is too low. This is also concerning as the New Education Policy (NEP) requires drastic changes for the long-term. 

Coming to the third aspect, which is a scheme-wise allocation of funds, the Mahatma Gandhi National Rural Employment Gurantee scheme (MGNREGS) the spending of the NDA government is comparable to the UPA government. As a percentage of overall government expenditure spending on MGNREGS at 2.4% is in the same range as in UPA, which was close to 2.6%. The scheme received more funding in 2020–2021 and 2021–2022 to accommodate the increased demand for work during the COVID–19 epidemic. In 2022-23 the allocated funds were lowered by 25.2% to Rs 73,000 crore. 

Allocations for health insurance surged fivefold with the introduction of PM-Jan Aarogya Yojna (PM-JAY) in FY 2018–19. Budget Estimates for the plan have stayed around 6,400 crore since FY 2019–20, while Revised Estimates have been far lower. For example, REs were half at 3,200 crore in FY 2019–20 and less than half at 3,100 crore in FY 2020–21. PMJAY aims to reduce severe out-of-pocket costs associated with serious medical episodes while giving poor and vulnerable families access to high-quality inpatient secondary and tertiary care.

Please click here to read the report

CNES Infosphere, 18 January, 2023, https://www.cnesinfosphere.com/_files/ugd/85c814_e5347dc836c3433fa87a328475083f1f.pdf

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