By the time readers of this sui generis publication which recently crossed the milestone of 25 years of uninterrupted publishing read this editorial, the Union Budget 2025-26 will have already been presented to Parliament and the public by long-tenured Union finance minister Nirmala Sitharaman.
With the annual rate of GDP growth unlikely to exceed 6.5 percent and the rate of inflation forecast at 5.3 percent in 2024-25, in real terms the revenue of the Central government is likely to remain flat. A readily available option is to auction a large number of the Centre’s 256 mostly loss-making public sector enterprises (PSEs) to boost revenue and also enable it to retire debt to reduce the Centre’s huge annual interest payout (Rs.11.62 lakh crore out of its total budget revenue of Rs.48.21 lakh crore in 2024-25). But despite the professedly pro-private enterprise BJP having been in office at the Centre for over a decade, it has failed to avail this win-win option to boost revenue and simultaneously reduce expenditure. As recited in our review of last year’s Union Budget 2024-25 (EW, August 2024), the market value of Central government PSEs is estimated at a humungous Rs.22 lakh crore. If these 256 legacy white elephants are auctioned over the next two years, it would substantially stabilise the Government of India’s finances.
In essence, the finance minister’s remit is to increase the government’s revenue to fund expenditure necessary for governance and economic development. Therefore, apart from substantially augmenting revenue by biting the bullet on the issue of privatisation of PSEs, it’s high time that she also applied her mind to reducing the Union government’s establishment expenditure which consumes 16 percent of the Centre’s budget; slicing non-merit middle class subsidies (higher education, electricity, piped water etc); reducing the constantly rising interest payout burden of the Government of India through the sales proceeds of PSEs. According to our calculation, these measures will enable the Centre to save and mobilise an additional Rs.7-8 lakh crore per year. This amount should be invested in public education and health, the prerequisite of a great productivity leap in Indian agriculture, industry and the services (see www.educationworld.in, EW August 2024).
Although this is the bold, breakaway budget we need, the budget we’ll get is likely to tread a familiar path. On the positive side, the BJP/NDA government’s outlay for infrastructure — a force multiplier — at around 25 percent of total expenditure is likely to be maintained. After allocations for establishment expenses, interest payout and defence, the piffling remainder is likely to be spread over on-going projects in all sectors of the economy — amounts too small to make a difference to the vast majority of citizens leading miserable lives at the bottom of the country’s iniquitous pyramid. Instead, it might be better for the FM to make bold policy announcements relating to freeing MSMEs from licence-permit-quota raj and permitting high street banking (see below).
