CONTENTS
PART I : The BUDGET IN NUMBERS
CHAPTER 1
HEADLINE BUDGET NUMBERS
A. TOTAL NON-DEBT RECEIPTS 3
A1. REVENUE RECEIPTS 3
• Centre’s Net Tax Receipts 4
• Non-Tax Receipts (NTRs) 4
• Total Revenue Receipts (TRR) 5
A2. NON-DEBT CAPITAL RECEIPTS 6
A3. TOTAL NON-DEBT RECEIPTS 7
B. EXPENDITURES 8
• Total Expenditure 8
• Revenue Expenditure 10
• Capital Expenditure 11
C. DEFICITS 12
• Fiscal Deficit 12
• Revenue Deficit 14
• Primary Deficit 14
CHAPTER 2
TAX REVENUES
GROSS TAX RECEIPTS (GTR) 15
DIRECT TAXES 17
• Corporation Tax 18
• Taxes on Income/Personal Income Tax 19
INDIRECT TAXES 19
• Goods and Services Tax (GST) 21
• Union Excise Duties 22
• Custom Duties 23
STATES’ SHARE IN TAXES 24
CHAPTER 3
NON-TAX REVENUES
OVERALL NON-TAX REVENUES (NTRs) 26
DIVIDENDS AND PROFITS 28
ECONOMIC SERVICES 30
OTHER NON-TAX RECEIPTS 32
• Interest Receipts 32
• Other Non-tax Receipts 33
NON-TAX REVENUES- AN ALTERNATIVE PRESENTATION 34
CHAPTER 4
NON-DEBT CAPITAL RECEIPTS
(Including Disinvestment Receipts)
NON-DEBT CAPITAL RECEIPTS 37
• Overall Non-Debt Capital Receipts 38
RECOVERIES OF LOANS AND ADVANCES 39
DISINVESTMENT RECEIPTS 39
OTHER MISCELLANEOUS CAPITAL RECEIPTS 40
OVERALL NON-DEBT RECEIPTS 41
CHAPTER 5
EXPENDITURES
TOTAL EXPENDITURES 43
• Standard Revenue—Capital Budget Format 43
• Schematic Expenditure Budget 45
• Central Government Expenditure 47
• Division of Expenditure Budget in Services 49
SOCIAL WELFARE EXPENDITURES 50
EXPENDITURES CHARGED ON CONSOLIDATED FUND OF INDIA 53
EXPENDITURES FROM DEDICATED CESSES AND OTHER FUNDS 55
BUDGET SUPPORT FOR DEPARTMENTAL COMMERCIAL UNDERTAKINGS 57
RAILWAY EXPENDITURES 58
• Railway Receipts 58
• Railway Expenditures 60
RECONCILIATION OF DIFFERENCE IN REVENUE AND CAPITAL 62
EXPENDITURES IN DIFFERENT BUDGET DOCUMENTS 62
CHAPTER 6
CAPITAL EXPENDITURES & INVESTMENTS
CAPITAL EXPENDITURES 65
INVESTMENTS 67
CHAPTER 7
SUBSIDIES, CSSs AND OTHER TRANSFERS TO STATES
SUBSIDIES 69
CENTRALLY SPONSORED SCHEMES or CSSs 71
MGNREGA is the Real Core of the Core Scheme 73
• Core CSSs are the Real Stuff 74
TRANSFER TO STATES 76
FINANCE COMMISSION TRANSFERS 79
CHAPTER 8
NON-CURRENT AND REAL EXPENDITURES
Division of Current/Real Expenditures 82
CHAPTER 9
FISCAL DEFICIT AND BORROWINGS
FISCAL DEFICIT AND BORROWINGS 84
CHAPTER 10
DEBT AND LIABILITIES
Total Debt and Liabilities 88
Components of Internal Debt 89
Other Liabilities 91
part II : budget 2021-22
CHAPTER 11
BUDGET 2021-22: OVERVIEW OF IMPLEMENTATION PERFORMANCE
A: REVENUES AND NON-DEBT CAPITAL RECEIPTS 95
TAX REVENUES 95
• Spectacular Rebound in Centre’s Net Tax Receipts 95
• Big Buoyancy in Corporate Tax Collections 96
• Personal Income Taxes also Joined the Party 97
• GST Collections Made a Triumphant Comeback 98
• Central Government made up GST Compensation Cess Shortfall by
Providing Loans to States 99
• Government Continued to Maintain High Excise Duties 100
• Customs Duties Shot Up on Blockbuster Imports 101
B: EXPENDITURES 103
EXPENDITURE PERFORMANCE 103
• Slow Start to Revenue Expenditures Made-up in Last Quarter 103
• A Considerable Part of Capital expenditure was Not Real 104
• Total Expenditure Performance Result of Increases in Both Revenue and
Capital Expenditures 105
NON-CURRENT EXPENDITURES 106
• Interest Payments Grew-Up the Most as Well 106
• Pension Payments—Defence Pensions are Twice the Civil Service Pensions 107
• Mandatory Transfers to States and UTs 108
• Total Non-Current Expenditures 108
REAL/CURRRENT EXPENDITURES 109
• Reclassification of Real Expenditures in Three Core Functions 109
• Expenditure on Public Goods and Services is Relatively Small and Concentrated
on Defence Services 110
• With No Arrears Clearance, Redistribution Expenditure Declined 111
• Growth Expenditures were Mostly Focussed on Infrastructure and Investment
in Public Sector Entities 112
CHAPTER 12
TAX POLICY PERFORMANCE
A: CORPORATE TAX 114
• Corporate Rate Reforms 114
• Corporate Tax Incidence and Impact of Concessions 117
B: PERSONAL INCOME TAX/ TAXES ON INCOME 120
• Concessions/Incentives Expanded in 2015-16 and 2016-17 120
• Personal Income-Tax Rates Tinkered with in 2017-18 Budget 121
• Government Exempted Income Below Rs. 5 Lakh in 2019-20 Interim Budget 122
• Budget 2020-21 Complicated Personal Income Tax Rate System 122
• Budget 2021-22 Had Only Tinkering Type of Changes 123
COMMON TO CORPORATE AND NON-CORPORATE TAX PAYERS 125
• Tax Payers’ Charter 125
• Concessions to Start-ups 125
• Making Infrastructure Sector Attractive for Investments 126
• Infrastructure Debt Funds 126
• Additional Tax Incentives for International Financial Services Centre 126
• Faceless ITAT 127
• Replacement of Authority for Advance Rulings 127
• Rationalisation of Equalisation Duty 127
• Depreciation of Goodwill and Taxation of Capital Gains 128
• Expanding TDS Machinery for Tax Collection 128
TAX INCIDENCE AND IMPACT OF INCENTIVES
(NON-CORPORAREASSESSEES) 129
• Revenue Impact of Tax Incentives 130
C: INDIRECT TAXES 131
CUSTOMS 132
• Agriculture Infrastructure and Development Cess (AIDC) on Specific imports 132
• Changes in Customs Act in Budget 2021-22 133
• Important Changes in Customs Tariff 133
EXCISE DUTIES 134
• Changes Introduced in Budget 2021-22 134
GOODS AND SERVICES TAX 135
• Amendments in CGST And IGST Acts 136
D: CENTRE-STATE SHARING OF CENTRAL TAXES 136
• Fiscal Federal System Envisages 41% of Central Tax to Devolve on States 136
• Central Government has been reducing States’ Share Continuously 136
E: UNFINISHED TAX REFORM AGENDA 137
CHAPTER 13
REDISTRIBUTION EXPENDITURES
FUNDAMENTAL NATURE OF REDISTRIBUTION EXPENDITURES 140
• Redistribution is a Core Function of Welfare Government 140
• Redistribution Expenditures—Welfare or Freebies? 141
• Fiscal Expenditure on Redistribution Must be a Deliberate Policy Choice 142
TOTAL REDISTRIBTUTION EXPENDITURES 143
FOOD AND AGRICULTURE SUBSIDIES 143
• Subsidised/ Free Foodgrains 143
• Fertiliser Subsidies 145
• Other Food and Agriculture Subsidies 146
DIRECT INCOME TRANSFERS 147
• Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) 147
• National Social Assistance Programme (NSAP) 148
• Prime Minister Awas Yojana (PMAY) 149
• Petroleum Subsidies 150
• Scholarships 150
JOBS AND EMPLOYMENT ASSISTANCE 152
• Employment Backstop Programmes 152
• Livelihood/ Self Employment Programmes 154
• Wage Income Contribution Programmes 155
• Other Employment Oriented Interventions 158
INDIRECT TRANSFERS 158
• Pradhan Mantri Fasal Bima Yojana 158
• LPG Connections/ Pradhan Mantri Ujjwala Yojana 159
• Social Security Schemes/Expenditures 160
IN-KIND SUPPORT AND SERVICES 161
• Education Services 161
• Health Services 162
• Services to Children 164
• Jal Jeevan Mission 165
• Other In-kind Services 166
REDESIGNING REDISTRIBUTION PROGRAMMES 166
• Redistribution Expenditure is Unjustifiably Large 166
• Centre Runs Many Populist/Freebie Schemes 167
• A Better Way to Organise Redistribution Expenditures 168
CHAPTER 14
GROWTH EXPENDITURES
GROSS VALUE ADDED (GVA) AND GROWTH EXPENDITURES 170
• Three Budgetary Channels which Impact Economic Growth 170
• Focus on Government GVA Expenditure in this Chapter 171
• GVA and Fiscal Accounts Classifications do not Converge 172
GROWTH STRATEGY AND EXPENDITURES IN BUDGET 2021-22 173
• Growth projection and Strategy 173
• Specific Growth-Oriented Expenditure Measures 173
• Budget Growth Expenditures Grouped into Four Sectors 175
AGRICULTURE SECTOR GVA AND FISCAL EXPENDITURES 175
• Agriculture GVA and Growth in 2021-22 175
• Government Incurs Agriculture Group Related Expenditures in
Many Departments 176
• Crops GVA Related Expenditures did Grow in Year 2021-22 176
• Other Agriculture Sub-Groups GVA Related Expenditures 177
• Specific Growth-Oriented Expenditures Relating to Crops 177
• Crop Group Expenditures have Low Growth Impact 179
INDUSTRY GVA AND EXPENDITURES 179
• Industrial Sector- in Aggregate 179
• Mining and Quarrying/ Mineral Sector 180
• Industrial/Manufacturing 181
• Utilities 182
• State of PLI Schemes 183
• Total Industry Expenditures and Impact on GVA 184
SERVICES GVA AND GOVERNMENT EXPENDITURES 184
• Services Sector Contributes Majority of GVA 184
• Government’s Services Growth Expenditures 187
INFRASTUCTURE GROWTH EXPENDITURE 189
GOVERNMENT CONTRIBUTION IN EXPENDITURE SIDE GDP 189
• Government Final Consumption Expenditure (GFCE) 190
• Capital Formation 190
• Public Sector Contribution to Capital Formation 191
JOBS AND EMPLOYMENT 192
• Budget Impact on Jobs and Employment 192
• Periodic Labour Force Survey (PLFS) Provides Information on Jobs 192
CHAPTER 15
AGRICULTURE SECTOR AND ECONOMIC STATUS OF FARMERS
AGRICULTURE POLICY CONTEXT AND EVOLUTION 194
• India’s Agriculture is Vast 194
• From Green-Revolution to Status Quo 196
• Current State of Agricultural Policy: Evolution Since 2014 196
• Hurried Marketing Reforms via Three Farm Laws Backfired 197
POLICY AGENDA FOR FIXING AGRICULTURE SECTOR 198
• India Needs to Fix the Agriculture Sector 198
• The Policy Agenda 198
AGRICULTURE POLICY REFORMS IN 2021-22 200
• Agriculture Policy Package in Budget 2021-22 200
• Agriculture Reforms Implementation during 2021-22 201
• 2021-22 A Policy Wash-Out Year for Indian Agriculture 202
CHAPTER 16
INDUSTRIAL AND PUBLIC SECTOR REFORMS
SECTION A: INDUSTRIALISATION 203
INDUSTRIAL POLICY CONTEXT AND EVOLUTION 203
• India’s Manufacturing Sector 203
• Industrialisation- Principal Budget Policy Plank since Independence 204
• Course Correction in 1991 205
• Manufacturing/ Industrialisation Policy Development since 2014 205
• Production Linked Incentive (PLI) is the Industrial Policy Today 206
INDUSTRIAL POLICY AGENDA 207
• We Need to Complete India’s Industrialisation 207
• A Real Industrial Policy Agenda 208
BUDGET 2021-22: WASN’T A YEAR OF GLORY FOR INDUSTRIALISATION 210
B: DISMANTLING THE INDUSTRIAL PUBLIC SECTOR 210
CAPITAL INVESTMENTS IN PUBLIC SECTOR 211
• Is Any One Really In-charge 211
• Public Sector in National Accounts 212
• Investments Per CPSE Survey 212
GOVERNMENT INVESTMENTS PER BUDGET PAPERS 213
• Investments in Departmental Undertakings and Infrastructure Authorities 213
• Investments in Public Enterprises 214
• State of Investments at End 2021-22 215
DISINVESTMENTS 217
• Disinvestments in 2020-21 217
• Disinvestments in 2021-22 218
NET INVESTMENTS 219
• 2020-21 219
• 2021-22 219
OTHER ASPECTS OF PUBLIC SECTOR INVESTMENTS 219
• Commerciality of Investments 219
• Return on Investments 221
CPSE REFORM AGENDA 222
• CPSEs Have No Rationale Today 222
• Weak Privatisation Performance So Far 223
• Dismantle the Public Sector 223
• Promise of Budget 2021-22 has not Translated in Performance 226
CHAPTER 17
SERVICES, DIGITAL ECONOMY & SOCIETY
India Needs to Make Digital Economy Goal Number One 228
INDIAN INITIATIVES SINCE 2014-15 229
• Digital Literacy 229
• Fibre Optic Network in 2.5 Lakh Villages 229
• Digital Payments 230
• Turn Towards Artificial Intelligence and Cryptocurrencies 230
• Digital India Programme 231
• Fiscal and Policy Interventions in Chips and Hardware 231
• India’s Software Development Policies 232
• Budget 2020-21 232
• Implementation of Budget Announcements 2020-21 233
• Budget 2021-22 234
DIGITAL POLICY AND REFORM AGENDA 234
CHAPTER 18
BUILDING INDIA’S INFRASTRUCTURE
INFRASTRUCTURE- THE KEY TO GROWTH AND DEVELOPMENT 237
INFRASTRUCTURE POLICY AND INVESTMENTS UNTIL 2020-21 238
• Infrastructure Focus in Budget 2020-21 238
• Infrastructure Expenditure in 2020-21 239
• National Infrastructure Pipeline (NIP) 241
• National Logistics Policy 242
• Energy Sector Reforms 242
• Roads and highways 243
• Railways 243
• Ports and Airports 244
INFRASTRUCTURE POLICY AGENDA FOR INDIA 245
INFRASTRUCTURE BUDGET AND PERFORMANCE 2021-22 247
• Establishment of Development Financial Institution 248
• Debt Financing of REITs and InvITs 248
• Asset Monetisation 249
• Physical Targets for Infrastructure 249
• Infrastructure Investment in 2021-22 250
• Infrastructure Policy Reforms 252
CHAPTER 19
ENVIRONMENT, CLIMATE CHANGE AND POLLUTION
Wholesome Environment makes the Quality of life 253
ENVIRONMENTAL POLICY AND AGENDA SINCE 2014-15 254
INDIA’S ENVIRONMENTAL AGENDA 255
BUDGET 2021-22 AND PERFORMANCE 259
CHAPTER 20
ALL ROUND FINANCIAL SECTOR DEVELOPMENT
Development of All-Round Financial Sector is Imperative for Overall Growth 260
FINANCIAL SECTOR POLICY IN BUDGETS SINCE 2014-15 261
• Money Markets, Exchange Markets and Monetary Policy 261
• Foreign Direct Investment (FDI) 261
• ADRs/GDRs/ Indian Depository Receipts 262
• Commodity Derivatives Market 262
• Single Forms/ KYC 262
• Bond Market 262
• RIETS and InvITs 263
• Gold 264
• Bank Reforms/Capitalisation 264
• Financial Inclusion and Security 265
• Unclaimed Deposits and Assets 265
• Fund Management/ Alternative Investment Funds 265
• Funding Small Businesses 265
• Budget 2020-21 266
• Financial Institutions 266
• Financial Markets 268
FINANCIAL SECTOR REFORMS AND AGENDA 268
BUDGET 2021-22 AND PERFORMANCE 271
• SECTION VII: BUDGET 2022-23: AN IMPLEMENTATION OVERVIEW 274
• SECTION VIII: REVENUES AND TAX POLICY MEASURES 274
• SECTION IX: EXPENDITURES: GRANULAR PERFORMANCE 274
• SECTION X: PUBLIC SECTOR EXPENDITURES & RECEIPTS 274
• SECTION XI: IMPLEMENTATION OF POLICY MEASURES 274
• SECTION XII: DEBT AND LIABILITIES 274
part iii : budget 2022-23
CHPATER 21
BUDGET 2022-23 AND EXEPENDITURES IMPLEMENTATION OVERVIEW
SECTION I: HEADLINE IMPLEMENTATION PROGRESS 275
REVENUE AND NON-DEBT CAPITAL RECEIPTS 275
• Centre’s Revenue Receipts 275
• Non-Debt Capital Receipts 276
• Total Non-Debt Receipts 277
EXPENDITURES 278
• Total Expenditure 278
• Revenue Expenditure 279
• Capital Expenditure 280
DEFICITS 281
• Fiscal Deficit 281
PART II: CURRENT AND NON-CURRENT EXPENDITURES 282
• Most of Increase in RE 2022-23 Accounted for by Current/Real Expenditures 282
• Almost All Increase in Current Expenditures Accounted for by Redistribution
Expenses 285
• Expenditures on Public Goods and Services Relatively Unchanged in RE 286
• Food and Fertiliser Subsidies Accounted for Bulk of Increase in Redistribution
Expenditures in 2022-23 287
• Growth Expenditures has not Changed Much at RE Stage 289
• Summary Composition of Total Expenditures, Non-Current Expenditures
and Current/ Real Expenditures 290
PART III: IMPORTANT EXPENDITURE PROVISIONS & CHANGES 291
CHAPTER 22
REVENUE AND NON-DEBT CAPITAL RECEIPTS PERFORMANCE
GROSS TAX RECEIPTS (GTR) 295
• Budget Estimates 295
• GTR Performance 295
DIRECT TAXES 296
• Corporation Taxes 296
• Taxes on Income/ Personal Income Tax 298
INDIRECT TAXES 299
• Customs 299
• Union Excise Duties 300
• Goods and Services Tax (GST) 301
STATES’ SHARE IN TAXES 303
CENTRE’S NET TAX RECEIPTS 304
NON-TAX REVENUE PERFORMANCE 305
• Non-tax Revenue Budget Target 305
• Interest Receipts 305
• Dividends and Profits 306
• Economic Services 307
• Other Non-Tax Receipts 307
TOTAL REVENUE RECEIPTS 308
DISINVESTMENT AND OTHER NON-DEBT RECEIPTS PERFORMANCE 309
• Non-Debt Capital Receipts 309
• Recoveries of Loans and Advances 309
• Miscellaneous Capital Receipts 310
• Overall Non-Debt Capital Receipts 311
REVENUE AND NON-DEBT CAPITAL RECEIPTS/ TOTAL RECEIPTS 311
CHAPTER 23
IMPLEMENTATION OF TAX POLICY ANNOUNCEMENTS
SECTION I: DIRECT TAXES 313
NEW SIGNIFICANT POLICY MEASURES 313
• Taxation of Cryptocurrencies 314
CONCESSIONS/INCETIVES/RELIEFs 317
• Voluntary Tax Compliance/ Updated Return 317
• Tax Incentives to International Financial Services Centre (IFSC) 317
• Incentives to Individuals 318
• Concessions/Reliefs to Businesses 319
• Disallowances/Tightening 320
• Procedural Changes 323
• Clarificatory Amendments 326
SECTION B: INDIRECT TAXES 328
CUSTOMS 328
• Changes in Customs Act 1962 328
• Changes in Customs Tariff Act 1975 329
• Doing Away with Exemptions and Concessions 330
• Phased manufacturing programme Duty Rates 332
• Adjusting Duties/Health Cess for influencing manufacturing or
Consumption in India 332
• Other miscellaneous Changes 333
• Anti-Dumping Duty/ Countervailing Duty/ Safeguard Measures 333
• Amendment in Trade Facilitation Rules 333
EXCISE DUTIES 334
Goods and Services Tax 334
CHAPTER 24
IMPLEMENTATION OF MAJOR DEVELOPMENT PROGRAMMES
SECTION A: CENTRALLY SPONSORED SCHEMES 336
• Revamping/Rationalisation of CSSs 337
• CSSs Outlay for 2022-23 338
• Significant Changes In Schematic Allocations 339
• Mahatma Gandhi National Rural Employment Guarantee Programme
(Mgnrega) 339
• Jal Jeevan Mission 340
• National Health Mission 342
• National Education Mission 345
• Pradhan Mantri Awas Yojana (PMAY) 347
• PMAY (Urban) 347
• PMAY (Rural) 347
• Integrated Child Development Scheme (ICDS)/POSHAN 2.0 349
• Pradhan Mantri Gram Sadak Yojana (PMGSY) 349
OTHER CSSs 350
• Schemes for General Transfers to Poor 351
• Schemes for Transfers to Identified Vulnerable Groups 351
• Agriculture Productivity Improvement Schemes 352
• Animal Husbandry Schemes 353
• Infrastructure and Area Development Programmes 353
• Environment Programmes 354
• Public Services Improvement Programmes 354
• Human Development and Employment Programmes 355
• Health and Sanitation 356
• Other Schemes 357
SECTION B: CENTRAL SECTOR DEVELOPMENT SCHEMES 357
• Pradhan Mantri Fasal Bima Yojana 357
• Interest Subsidy for Short Term Credit to Farmers 358
• Pradhan Mantri Samman Nidhi (PM-KISAN) 359
• Promotion of Electronics and IT HW Manufacturing (MSIPS, EDF and
Manufacturing Clusters) 360
• Promotion of Digital Payments 361
• Pradhan Mantri Swasthya Suraksha Yojana 362
• Aatmnirbhar Bharat Rojgar Yojana 362
• Solar Power Development Programme 363
CHAPTER 25
EXPENDITURE ON SUBSIDIES
TOTAL SUBSIDIES 366
FOOD SUBSIDY 366
• Subsidised and Free Foodgrains Schemes 366
• Foodgrains Allocation and Consumption Under the Schemes 367
• Government Dumps NFSA In Favour of PMGKAY 368
• Food Subsidy Implications 368
FERTILISER SUBSIDY 369
• Fertiliser Subsidy Cost 369
• Components of Fertiliser Subsidies 369
• Fertiliser Subsidy in 2022-23 370
• Urea Fertilisers Soft Nationalised 370
PETROLEUM SUBSIDY 371
INTEREST SUBSIDIES 372
OTHER SUBSIDIES 374
CHAPTER 26
CAPITAL AND INFRASTRUCTURE EXPENDITURES
CAPITAL EXPENDITURE IN 2020-21 377
• Capital Expenditures Grew at Overall Expenditure Growth Rate until 2019-20 377
• No Real increase in Capital Expenditure in 2020-21 378
• Operational Loan Disguised as Capital Expenditure 378
• Widespread Reduction in Capex 379
CAPITAL EXPENDITURE 2021-22 379
• Sharp Rise in Capex at RE 379
• Equity Support to Air India Asset Holding to Cover Air India Bail-Out
Bloated Capex 380
• Actual Capital Expenditure in 2021-22 380
CAPEX BUDGET 2022-23 380
• Finance Minister Claims Massive Increase of 35.4% in Central Government
Capex 380
• Total Public Capex Grew Much Smaller 381
• Excluding Capex Loans to States Neutralises Increase Completely 382
• Substitution of Public Sector Capex Hides More Serious State of Affairs 382
• Capex Loans to States to Boost Budget Capex is also a Bad Policy 383
• Capex Substitutions also Indicate Quality Deterioration 383
• Green Bonds Make No Difference to Central Capex Expenditure 384
PERFORMANCE OF MAJOR CAPITAL EXPENDITURES 385
• Roads Construction (Capital outlay Rs. 1,87,744 crore) 386
• Railways (Capital outlay Rs. 1,37,100 crore) 387
• Defence Expenditure (Capital outlay Rs. 1,52,369 crore) 388
• Department of Telecommunication (Rs. 54,150 crore) 389
• Ministry of Housing and Urban Affairs (Rs. 27,341 crore) 390
• Department of Atomic Energy (Rs. 14,283 crore) 391
• Department of Space (Rs. 7,465 crore) 391
• Police (Rs. 10,500 crore) 392
• Department of Economic Affairs (Capital outlay Rs. 8,397 crore) 392
CHAPTER 27
INVESTMENT-DISINVESTMENT IN PUBLIC SECTOR
Public Sector Enterprises in the Public Enterprises Survey 394
Investments By Government in Public Sector Enterprises 395
THE INVESTMENTS 395
• Broad Categorisation of Investments in Public Sector Enterprises (Statement 26) 395
• Government Investments In Public Sector Enterprises are Quite Large 396
• Government Investment in Commercial CPSEs has been Increasing Big
Time Though Reduced in RE 2022-23 397
• Why did Government’s Share in the investment Went up so Sharply in 2021-22? 397
• Investment in Financial Institutions have been Massive Until 2021-22 but
Reduced to Trickle in 2022-23 398
• Investment in Non-CPSE Corporate Entities Constitute Dominant Proportion
and Continue to Bulk Up in 2022-23 399
• Investment in Departmental Undertakings 400
• Minority and Other Investment 400
• Progress of Government’s Equity Investments in 2022-23 401
• Government’s Investments in Public Enterprises are a Cause of Concern 402
DISINVESTMENTS/PRIVATISATION RECEIPTS 402
• CPSE Privatisation Policy Announced in 2021-22 Budget 402
• Very Little Action Though 403
• Dwindling Disinvestment Receipts 403
NET INVESTMENTS/DISINVESTMENTS 404
• The Public Sector Rolls On 405
CHAPTER 28
IMPLEMENTATION OF ECONOMIC AND
FINANCIAL SECTOR POLICIES
A: ECONOMIC POLICY AGENDA 406
SECTION IA:CARRYOVER ANNOUNCEMENTS OF 2021-22 AND BEFORE 407
• Power Sector Reforms 407
• National Hydrogen Mission 410
• Production Linked Incentive (PLI) Scheme 411
• Privatisation Push 412
SECTION 1B: NEW ANNOUNCEMENTS IN BUDGET 2022-23 414
• Logistics Infrastructure 414
• Railways 416
• Agriculture 417
• Spectrum Auction 417
• Reforming SEZs 418
• Other Announcements 418
B: FINANCIAL SECTOR POLICIES AND MEASURES 420
SECTION BI: CARRY-OVER FROM 2021-22 AND BEFORE 421
• NaBFID- New Development Finance Institution 421
• Recapitalisation of Banks 424
• Insurance Laws Liberalised But No Follow Up on Privatisation of General
Insurance Companies 425
• Amendment in General Insurance Laws for Facilitating Privatisation 425
• National Monetization Pipeline (NMP) 426
• Establishing ‘Bad Bank’ 428
• Emergency Credit Line Guarantee Scheme (ECLGS) 431
• Partial Credit Guarantee Scheme 433
• Debt Markets Reforms 433
SECTION BII: ANNOUNCEMENTS IN 2022-23 BUDGET 434
• Digital Rupee 434
• Digital Banking 435
• Green Bonds 435
• Developing India’s International Financial Centre 436
• More Thematic Fund of Funds 437
• Allocation of Rs. 1 Lakh Crore to States for Catalysing Investments 437
CHAPTER 29
IMPLEMENTATION OF PUBLIC AND SOCIAL SERVICES
POLICIES AND PROGRAMME
SECTION A: PUBLIC GOODS AND SERVICES 438
• Land Records System 438
• Wholesome/Sustainable Environment 440
• Governance Reforms for Ease of Doing Business and Living Life 441
• Defence 443
• Urban improvement 444
SECTION B: SOCIAL SERVICES 444
• Vaccines 444
• Migrant Workers and Labourers 445
SECTION IB: NEW ANNOUNCEMENTS IN BUDGET 2022-23 447
• Education Services 447
• Health Services 448
• Promotion of Digital Payments 448
• Expansion of mobile and Data Services to Rural Areas 449
CHAPTER 30
FISCAL DEFICIT, BORROWINGS AND DEBT & LIABILITIES
A: FISCAL DEFICITS 450
• Fiscal Deficit is an Extremely Significant Budget Variable 450
• Moderate Fiscal Deficit of 3% Emerged as Sensible Compromise 451
• Fiscal Deficits since 2013-14 451
• Strong Commitment to Fiscal Deficit Control in Pre-Pandemic Years 452
• Fiscal Deficit Commitment Abandoned in 2020-21 453
• FRBM Law Consigned to Flames 454
• Actual Fiscal Deficit Crossed 9% of GDP for the First Time Ever 456
• Fiscal Deficit Continued to Remain Elevated in 2021-22 and 2022-23 456
• Concept of Primary Deficit Needs Redefinition 458
B: BORROWINGS 458
• Components of Borrowings 459
• Market Borrowing 461
• Securities Against Small Savings 464
• State Provident Funds 465
• Other Receipts (Internal Debts and Public Account) 465
• External Debt 467
• Net Cash Draw-down 468
• Overall Borrowing for Deficit Financing 469
BORROWINGS BELOW THE LINE/ FISCAL DEFICIT NEUTRAL BORROWING 473
OFF-BUDGET BORROWINGS 474
• Fully Serviced Bonds/Extra Budgetary Resources 474
• Fiscal Expenditure Borrowings from NSSF 475
• Total Off-Budget Borrowings 476
TOTAL FISCAL DEFICIT/BORROWINGS 476
C: DEBT AND LIABILITIES
• Debt and Liabilities (As Per Budget Papers) 477
• Debt and Liability of Government of India in Budget and Status Paper 479
• Debt and Liabilities in 2020-21 (As Per the Budget Papers) 479
• Debt and Liabilities in 2020-21 (As Per Status Paper) 480
• What Explains The Difference? 480
• Exclusion of Cash Balance 482
• Government Starts Acknowledging Real Liabilities 482
QUALITATIVE ASPECTS OF INDIA’S DEBT AND LIABILITIES 483
• Rapidly Rising Debt And Liabilities 483
• RBI Lent a Helping Hand in 2020-21 in Managing Debt Issuance at Low Yield 483
• Government Has a Complicated/Muddled Policy Regime for Foreign Investors 484
• Intent to keep headline Fiscal Deficit low did not lower Debt and liabilities 485
• High Debt is a Credit Rating Risk 486
D: NET LIABILITIES OF GOVERNMENT OF INDIA 486
E: NATIONAL SMALL SAVINGS FUND (NSSF) 488
• Size of the Fund 488
• Composition of Accretion 488
• Application of NSSF Liabilities 488
• Performance of NSSF Contribution 490
F: GUARANTEES GIVEN BY GOVERNMENT 491
• Guarantees given to the RBI, Other Banks and Financial institutions for
Repayment of principal and payment of interest 492
• Guarantees given for Repayment of Share Capital, payment of minimum
Annual Dividend and Repayment of bonds or loans, Debentures 492
• Guarantees given in pursuance of Agreements Entered into by the
Government of India 492
SECTION XIII: MY COMMENTS ON BUDGET 2023-24 496
part iv : budget 2023-24
CHAPTER 31
BUDGET 2023-24: A BROAD REVIEW
A: MACRO-ECONOMIC CONTEXT AND PROPOSALS 497
• Budget 2023-24 Ignores Macro-Economic Context 497
• Instead, Budget Speech has Become a Litany of Micro-Developmental Measures 498
• Government’s Economic Vision and Priorities Remain Fuzzy 499
• Large Budgetary Capital Expenditure is Not Necessarily a Robust Growth
Strategy 500
• Blanking-out any Discussion on Inflation did Disservice to Poor 501
• Capital Investment Will Generate Jobs- A More Suspect Strategy 502
B: REVIEW OF BROADER BUDGET NUMBERS 502
NON-DEBT RECEIPTS 502
• Tapering Tax Revenue Growth Makes 2023-24 Net Tax Revenue
Estimates Realistic 503
• No Major Tax Reforms; Some Adjustments in Personal Income Tax Regime 503
• Non-tax Revenues Require a Hard Look to become a Steady Contributor 504
• Government Has Virtually Given-up on Disinvestment & Privatisation 505
EXPENDITURES 505
• Non-Current/Unproductive Expenditure are Growing at 62% Higher CAGR 506
• Non-discretionary Interest and Pension Expenditure are Rising Fast 506
• Government Should Stop Financing Capital Expenditure of States 507
DEFICITS 508
• Government Did Not Consider Drastically Bringing Down Fiscal Deficit 508
• Government Seems to have Lost Will to Deal with Fiscal Deficit 508
• A Few Non-Tax Amendments through Finance Bill 2023 509
CHAPTER 32
TAX REVENUE AND POLICY MEASURES
SECTION A: TAX REVENUES 511
• Corporate Tax Growth has Entered in Low-Growth Cycle 511
• Government’s Corporate Surcharge Management is Baffling 512
• Personal Income Taxes have been Steadier through Covid and are Catching-up
with Corporate Tax Revenues 513
• Tinkering with Personal Income Tax Slabs and Rate Regime should Stop 514
• Excise Duty Receipts are Likely to Remain in Flux in 2023-24 515
• GST Revenues are Showing Clear Signs of Peaking and Plateauing 516
• States’ Share in Gross Tax Revenues has Fallen by about 6% in 5 years 516
B: TAX POLICY MEASURES 517
• Pursuit of Simple Tax Forms & Concessions to Small Businesses will not
Complete Until We Segregate Wage and Business Income of Individuals 518
• Government Extends Benefits to New Favourite- Cooperatives 519
• Taxation of Online Gaming Streamlined and Rationalised 520
• Stringent TCS Provisions on Use of Liberalised Foreign Remittances
will Hurt People 521
• Attempt to Limit Tax Benefits to High Net Worth Taxpayers 522
• Special Provision for Taxation of Market-Linked Debentures also
Symptomatic of Not-Fit-For-Purpose Wealth Tax System 523
• Start-Up Funding Likely to Receive a Setback 523
• Tax Treatment of Trusts & Other Charitable Entities Continues to be Muddled 524
• Juggling of Custom Duties Continues 525
• Two Changes in Excise Duty 526
• Government Ends Discrimination against MSMEs Supplying Goods through
Electronic Commerce 527
• Restricting Availing of Input Tax on Supplies Connected with CSR Obligations
is More of Micro-management 527
CHAPTER 33
NON-TAX REVENUE AND NON-DEBT CAPITAL RECEIPTS
A: NON-TAX REVENUES 529
• Non-Tax Revenues are Volatile and Declining 529
• Sovereign Non-Tax Revenues Make-up More than Half 530
• RBI Surplus Transfer Needs to be Fixed for Steadier Non-Tax Revenues 531
• Telecom Sector Issues have been Resolved Substantially to Bring Steadier
Revenues 532
• Increasing Interest Payments Hide Rising Vulnerabilities 533
• Financial Sector Dividend Receipts have Gone through a Roller-Coaster Ride 534
B: NON-DEBT CAPITAL RECEIPTS 535
• Government has Stepped in as a Financier since 2019-20 536
• There is Much Slower Spurt in Recovery of Loans and Advances 536
CHAPTER 34
FISCAL DEFICIT, BORROWING PROGRAMME AND DEBT
A: BORROWING PROGRAMME 538
• Weakened Commitment to Contain Fiscal Deficit Leads to Large Deficit/
Borrowing 538
• G Secs and Small Savings Finance Bulk of Deficit 539
• Net Market Borrowings (G-Secs) to Increase by only 7% in 2023-24 539
• Small Savings Inflows Might Not be as Robust as Projected 540
• Floating & Inflation Indexed Bonds are Out of Favour 542
• Efforts to Raise Borrowing through New Instruments is Not Making Headway 543
• Government’s Green Bonds are very Close to Green Washing 543
B: DEBT AND LIABILITIES 544
• Internal Debt Is Growing At A Worrisome Rate 545
• Borrowings from Small Savings has More than Quadrupled in 5 Years 545
• Govternment Debt is Way-off the Mark FRBM Target 546
CHAPTER 35
PUBLIC GOODS AND SERVICES EXPNDITURES
Public Goods and Services Budget 547
DEFENCE 548
• Total Defence Budget Comes in Four Demands 548
• Army Accounts for about 70% of Defence Revenue Expenditure 549
• In Capital Expenditure, Army Gets Much Less Relatively 550
• Time to Revisit Defence Forces and Infrastructure Finance Strategy 551
INTERNAL SECURITY 551
OTHER PUBLIC GOODS AND SERVICES EXPENDITURES 553
• Organs of State Don’t Cost Much in Financial Expenditure 553
• Government Provides Some Outstanding Public Goods & Services 554
• Other Ministries/Departments Providing Public Goods & Services 555
• Other Public Expenditures are Certain Grants to States 556
• Advisable To Bring Out a Statement on Public Goods and Services 557
CHAPTER 36
REDISTRIBUTION EXPENDITURES
FOOD AND AGRICULTURE SUBSIDIES 559
• NFSA Programme has Transformed into PM Garib Kalyan Scheme 560
• Government has Assumed FCI Borrowing 1,45,380 crore in 2023-24 561
• Government’s Subsidy Obligation in 2023-24 Hinges on Ensuing Wheat Crop 562
• Fertiliser Policy has Built-in Heightened Fiscal Vulnerabilities 562
• Government May Not Face Surprises in Remaining Food and
Agriculture Subsidies 563
JOBS AND EMPLOYMENT SUBSIDIES/EXPENDITURE 564
• Budget Outlay for Jobs/Employment Schemes Declining 565
• MGNREGA Outlay is Definitely Under-provided 565
• Government has Given-Up on Contributory Retirement Pension Schemes 566
DIRECT CASH/BENEFIT TRANSFER 567
• PM KISAN has Now become Permanent Feature of Wooing Farmers Bouquet 568
• Government is Deeply Focussed on Completing Housing Targets before 2024 569
INDIRECT TRANSFERS 570
• Crop Insurance Scheme is Going Nowhere 570
IN-KIND SUPPORT 571
• Jal Jeevan Mission is the Largest People Benefit Programme in Current Term 572
• National Education Mission Expenditures have been Drifting 573
CHAPTER 37
CAPITAL AND GROWTH EXPENDITURES
INTRODUCTION 574
• Capital Expenditure, the Unique Selling Preposition of Budget 2023-24 574
• Most of Capital Expenditure is Part of Growth Expenditures in Budget 574
• Organisation of This Chapter 575
SECTION I: COMMENT ON CAPITAL EXPENDITURES 575
• Nominal Capital Expenditures Have Grown at a Fast Clip in Last Four Years 575
• A Part of Capital Expenditure only is Growth-Oriented 576
• Part of Growth Capex is Unreal Capex 577
• There is Massive Substitution of Public Sector Capex 578
• Fascination for Capital Expenditure Growth is Building Budgetary
Vulnerabilities 581
SECTION II: GROWTH EXPENDITURES 582
• Big Growth in Railways, Roads and Telecom 583
• Agriculture Growth Programmes Continue to Remain Stuck in Old Groove 584
• Too Many Cooks Promoting Industrial Growth 585
• Services Growth Outlays Needs to Increase 586
CHAPTER 38
INVESTMENT AND DISINVESTMENTS
INVESTMENTS 588
• Government Equity Investment Classified and Quantified 588
• Almost All of Commercial CPSEs Investment is as Good as Lost Investment 590
• NHAI Accounts for Bulk of Non-CPSEs Equity Investment 591
• Government is Feeling Relieved from Burden of Recapitalising Financial Entities 592
• Minority Equity Investment in State Metros and Railway PPP Projects 593
DISINVESTMENT 594
• Government Disinvestment Revenues have Shrunken 594
• Government has Virtually Abandoned Privatisation Programme 594
• A Reality Check on Four Transactions Still Officially in the Works 595
NET INVESTMENT 596
SECTION XIV: RATING AND EPILOGUE 598
part v : concluding comments
CHAPTER 39
RATING THE BUDGETS
Rating Metric Concept & Selecting Indicators 599
Turning Indicators into Specific Measurements 601
Rating Budget 2021-22 603
Rating Budget 2022-23 606
Rating Budget 2023-24 609
A Comment on Rating Determined 611
CHAPTER 40
EPILOGUE
Getting Inside the Lines 612
Budgets Need Re-engineering 613
This Book Presents Re-engineering Template 613
Non-Tax Revenues also Requires Rethinking 614
Budget is More Than the Estimates of Receipts and Expenditures 615
Beginning of a Demanding Journey 616
THANK YOU 618
A NOTE ON DATA AND REFERENCES 620
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