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What is the budget of Narendra Modi in the election year?

  • International
  • 14 January, 2022 20:08:49

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International Desk: India is going to announce the budget for the fiscal year 2022-23 soon. According to experts, the Modi government's budget will have a direct impact not only on the Uttar Pradesh Assembly elections in a month's time, but also on the 2024 national elections. Narendra Modi will get the last chance to spend money to win the hearts of the people to stay in power in the third term in this budget. Because, before the effective effect of the budget that will be passed in the next financial year, the ordeal of elections will come before the BJP government. With two important elections looming, the Modi government's budget this year may or may not have to be monitored, according to various media reports, The Economic Times.

Here is a summary for the readers of Jago News: What is the election budget? This means that the government will spend more on public welfare without taxing. In addition, the government will try to increase spending on infrastructure or adjust additional infrastructure spending. This helps to make the business path easier. As of October 2020, data shows that about one-third of India's 1,060 major infrastructure projects, including highways, railways and power plants, have been delayed by a 20 per cent increase in costs. Third, the election budget looks for new jobs. So, in this year's budget, the Modi government may introduce special schemes for small and medium businesses. Because, these are one of the vote banks of BJP. Job management According to the Independent Think Tank Center for Monitoring Indian Economy (CMIE), about 10 million new job seekers are added to India every year. Unemployment in the country reached eight percent last December. For most of 2020 and 2021, the rate was close to seven percent. Kaushik Basu, a former chief economist at the World Bank, told the BBC that nothing like this had happened in India in the last three decades. Not even during the Great Depression of 1991 (the Indian government did not have enough dollars to cover the cost of imports during the recession that year). According to him, unemployment has increased in most countries by 2020. But the unemployment rate in India is Bangladesh (5.3 percent). It also surpassed emerging economies such as Mexico (4.6 percent) and Vietnam (2.3 percent). According to experts, manufacturers and the construction industry play a big role in creating new jobs. For this reason, the BJP may have a special focus on these sectors in the election budget. According to a 2020 report by McInsol, an international consulting firm, there are only 600 large companies in India earning more than কোটি 500 million.

At least 1,000 medium-sized enterprises in the country needed to grow, and 100,000 smaller ones needed to reach medium-sized, McKinsey said. According to economists, the missing middle class is the most vibrant and dynamic part of the economy, which encourages innovation. Easy financing and structural reforms are needed to sustain their growth. Whatever program is announced in the manufacturing sector in this year's budget, it is unlikely to be a production-related incentive. Because of the epidemic, India's economy has already shrunk. As a result, there will be some pressure on the Modi government to attract faster investment. Government expenditure There is a direct correlation between expansionary budget and government expenditure. Indian market analyst Ajay Bagga says if wise advice prevails, they should have a big expansion budget this year, where there are voters - whether it is affordable housing, rural economy, infrastructure or job creation. The Bloomberg report also said that the Modi government could take steps to double the income of farmers. There will also be a focus on affordable housing and safe water for all. Tax The concern is, if the government does not raise taxes, then where will the extra money come from? According to Business Standard, India's debt burden continues to grow to reach 90 percent of GDP. Before the epidemic, the rate was less than 60 percent. This means that the burden of excess interest is an obstacle to increasing government spending.

Almost equal fear, even if the government's income is not enough. Business Standards says that in growing economies, a large portion of GDP usually goes to the government as revenue, which is used to finance health, education, welfare programs, as well as infrastructure and defense. In the case of India, the rate of central total revenue collection in GDP has remained virtually unchanged for many years. Even a decade ago, the rate was 10.2 percent, in the current fiscal year it has been set at 9.9 percent.

This means that the Government of India has very little opportunity to increase costs. The fact that revenue and gross expenditure do not increase in line with GDP means that if some programs get more money, it is clear that others get less.

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