Budget Expectation: There may be big announcements on NPS and Ayushman Bharat in the budget, economists have little hope of tax cut

Budget Expectations 2024: Finance Minister Nirmala Sitharaman will present the first full budget of the new government on Tuesday. Economists believe that in the general budget to be presented this week, there may be some announcements regarding social security schemes like New Pension System (NPS) and Ayushman Bharat. However, there is little hope of relief in the matter of income tax. They also say that to accelerate the economy, there is a possibility of emphasis on infrastructure, increase in rural and agriculture allocation and steps to promote micro and small industries.

Finance Minister Nirmala Sitharaman will present the first budget for the financial year 2024-25 (FY25) for the seventh consecutive time and the first budget of the third term of the Narendra Modi-led National Democratic Alliance (NDA) government in the Lok Sabha on Tuesday, July 23. When asked about the expectations regarding social security schemes in the budget, renowned economist and Professor NR Bhanumurthy of the National Institute of Public Finance and Policy (NIPFP) told PTI-Bhasha that some announcements are expected on NPS and Ayushman Bharat in the budget. There has been a lot of discussion at the state level regarding pension schemes. The central government had also formed a committee regarding NPS. The Prime Minister has said a few things about Ayushman Bharat. In such a situation, some announcements can be expected in both the schemes.

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While releasing the Bharatiya Janata Party’s manifesto for the Lok Sabha elections, Prime Minister Modi had said that all citizens above 70 years of age will be brought under the ambit of Ayushman Yojana for free treatment up to Rs 5 lakh. He had also said that the party’s focus is on ensuring dignity and better life and employment of the people through investment.

Regarding NPS and Ayushman Bharat, economist and Director General of research institute RIS (Research and Information System of Developing Countries) Sachin Chaturvedi said that this is a very important area. Major programs are already close to reaching the full target. New measures can be expected in this direction. In this regard, Professor Lekha Chakraborty at NIPFP said that social security schemes are important in the post-pandemic fiscal strategy. However, insurance schemes in the health sector make this system more expensive. Instead of insurance schemes, we need strong health infrastructure and health workers.

When asked about tax relief in the budget amid the BJP not getting an absolute majority in the Lok Sabha elections, Bhanumurthy said, “I do not think the election results will have any impact on the direct tax policy. Since private consumption is a matter of concern, the GST Council should consider reducing its rates, especially when tax collection has reached a record level.

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Chaturvedi also said, “I don’t think there will be anything in this regard in the budget.” Chakraborty, who is also a member of the Governing Board of the Munich-based International Institute of Public Finance, said, “A reduction in tax rates will increase the disposable income in the hands of the people and it can promote consumption. But we have to keep in mind that only a small part of the country’s population (about four percent) pays income tax.”

Regarding the priorities in the budget, Chaturvedi, who is also a member of the RBI board of directors, said, “All the seven priorities already identified in the budget… inclusive growth, last-mile access, infrastructure and investment, capacity utilization, green growth, youth power and expansion of the financial sector… should continue to be focused on.” He said, “In this context, three priorities are important for the budget. First, continuous focus on infrastructure development keeping capital expenditure as the reference point. Second, boost rural and agriculture related allocation and finally, more encouragement should be given to micro and small enterprises. These three measures will not only have a positive impact on other sectors but will also increase employment in the economy.”

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Bhanumurthy said, “The priority should be to maintain continuity with medium-term policies for growth and to make some long-term reforms towards developed India. Apart from this, the potential growth rate of the economy should be brought to eight percent by continuing public capital expenditure along with providing support to the capital expenditure of the states. ” Chakraborty said, “This will be a budget that will increase economic growth. However, there is very little scope for the Finance Minister to deviate from the path of fiscal consolidation. ”

Responding to another question, Bhanumurthy said, “The budget is likely to focus on growth with employment. Since the PLI (production based incentive) scheme has helped the industry during the Covid pandemic. Now there is a need to assess whether it has also helped in job creation. That is, there is a need to assess the PLI scheme. “Responding to a question related to the free grain scheme for 80 crore population, Chaturvedi said, “India has pulled out more than 35 crore people from multidimensional poverty after a lot of efforts. All efforts should be made to prevent them from going into the same situation again.

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The food programme is only part of the solution at that level. Development of micro and small enterprises, better health coverage and continued efforts for access to sanitation will be equally important.” However, Bhanumurthy said, “All measures like the food scheme launched during Covid need to be reconsidered. Instead, there are other areas like rural development on which the government needs to focus.”