India under Prime Minister Narendra Modi has changed the paradigm for integrated financial and policy planning from a five-year vision to initiate setting the stage for a quarter of a century
File image of Prime Minister Narendra Modi. Image credit: Press Information Bureau
The ninth Budget presented under the Modi regime has a distinctly futuristic content as compared to previous years, laying as it does the building blocks for planning the Amrit Kaal period, as the economy matures from 75 to 100 years.
A 25-year vision being ultra-futuristic, entails a visionary reimagining of institutions of tomorrow, capacity building for the future, and abundant resource planning to anticipate the risk-rewards of future policies, as also capitalising on the opportunities that an unknown future portends.
For example, futuristic policymaking and financial planning need to provision for negative challenges like climate change until 2070, as equally to remain agile in order to capitalise on the sunrise sectors of the future like digitisation, AI, drones, semiconductors, genomics, space economy, green energy and clean mobility as we stand at the cusp of Industry 5.0.
Coming to the Budget speech, taxpayers were typically transfixed on “what’s in it for me” in terms of tax reprieves, as anticipations were high due to impending elections in five states. Despite tax buoyancy from the limited base of only 8 crore of the population paying taxes, Indian revenues continue to emanate from a low tax base, with a tax to GDP ratio of 11 per cent, while the debt to GDP ratio at 90 per cent is at historic highs. That the finance minister resisted increasing taxes through enhanced health cresses or resorting to imposition of a pandemic tax must in this context reinforce investor confidence in maintaining status quo during challenging times.
The one remaining Budget to be presented under the Modi government next year which will be the penultimate one, is likely to be a continuation of 2021 and 2022’s taxes. In comparison, the 2024 budget which will be an interim one, will more likely be replete with populist, please-all measures, being the finale in the build up to the general elections.
The standout point of the Budget is the push in capital expenditure which invariably gives higher returns on investments when it comes to GDP. “One rupee spent towards Capex can give returns on investments ranging between Rs 2.5 and Rs 4.8 over a period of 1-7 years, as compared to revenue outflows such as direct cash transfers to the poor which yields returns of Rs 0.54 and Rs 0.98 over the same period.” Therefore, the overall increase in Capex by 35 per cent, which is 3 per cent of the GDP, is a major expenditure reform that will have a cascading effect in providing employment and crowding-in private sector investments across sectors.
What is clear from Budget 2022 is that India under Prime Minister Narendra Modi has changed the paradigm for integrated financial and policy planning from a five-year vision that the Congress era’s Planning Commission envisioned, to initiate setting the stage for a quarter of a century.
Besides, five-year planning was the norm, as it was coterminous with the tenure of elected governments, but Modi’s vision is path-breaking in as much as here is a leader who thinks for the nation way beyond his reign.
The Modi government had in 2015 dispensed with the Planning Commission of yore and moved towards the paradigm of the Niti Aayog. The primary objective in making this institutional shift was to make the Niti Aayog a visionary resource centre for state-of-the-art good governance, which was meant to function in collaboration with Indian states internally, along with consultative inputs from international think tanks externally.
The successive evolution in the planning process is visible in the focus of this Budget, in that it transcends short-term bandage solutions to planning with an ultra-futuristic blueprint, as for example, in planning for advanced urbanisation. This requires a “moonshot” approach to complex policy planning. Typically, moonshot problem solving attempts a 10x jump in outcomes, solutions and implementation, as compared to a 10 per cent progression.
The ’10x module’ of futuristic policymaking can well be replicated across four policies enumerated in the Budget to achieve quantum leaps in outcomes: Through the route of Capex expansion, digitisation, education, healthcare, the 5G auctions in telecom that will be a game changer, and advanced urbanisation.
As land is a state subject and falls under the concurrent list, planned urbanisation has been a laggard, necessitating the Central Government to take the lead with state governments by ensuring funding adequacy and overseeing project implementation. In terms of this Budget laying a 25-year roadmap, it is most needed in the planning of urbanisation, as the top six cities of India have grown in the most ad hoc and unsustainable manner.
Along with urbanisation, the government could consider a parallel growth of rurbanisation by upgrading a cluster of villages in close proximity into townships with modern amenities.
All in all, the signature stamp of Budget 2022 is that the planning horizon address the immediate challenges; considers what is needed to achieve 100 percent saturation in social sector projects by 2024; and from now onwards, alters its trajectory towards laying the foundations of ultra-futuristic planning required for of a maturing economy so that growth is rapid, sustainable and equitable to meet the aspirations of a New India @100 by 2047.
Bindu Dalmia, former chairperson for the National Committee on Financial Inclusion and Literacy at the Niti Aayog. Views expressed are personal.
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