With less than 24 hours left for the budget speech, irrespective of whether or not it will be an interim budget, it is important and interesting to observe the words used in the content of the speech. Even if the speech is often used by governments to highlight their achievements and promises for the future, the facts stated are selective and one needs to look at them objectively.
Here is a brief analysis of what points you should look at when the budget speech will be recited by the interim finance minister Piyush Goyal on Friday.
1. Fiscal Deficit: Ahead of the beginning of a financial year, that is in the annual budget, the government sets a fiscal deficit target. Fiscal deficit is the excess of total expenditure made by the government over its total earnings for the year.
For the year 2018-19, the fiscal deficit target was set at 3.3 percent of the GDP, and the speech will include where the books stand in this regard. It is usually legitimate for the numbers to change as there are two more months for expenditure to exceed targets and revenue to be earned.
2. Disinvestment: For 2018-19, the government disinvestment target was set at Rs 80,000 crore and the proceeds collected till now has only been Rs 35,500 crore. In the previous year, Rs 54,338 crore was collected from disinvestment proceeds with a target of Rs 72,500 crore in sight.
In fact, for 2017-18, the proceeds exceeded the target by the end of the year to touch the nearly Rs 1 lakh crore mark.
3. Gross borrowings: The gross borrowing programme for the year is based on the fiscal deficit target. It sets a number (which is flexible) on how much the government will borrow from the public through the National Savings Scheme and other government securities.
The number can be altered later in the year based on the status and confidence of keeping the fiscal deficit in control.
4. Tax base: Direct taxes make up for a large portion of the government's revenue.
In the last few years a lot has been said on the increase in the number of registered income taxpayers, however, the tax collection (income tax as well as GST) has not seen a considerable change largely due to the large portion of the registered firms and individuals that do not fall under the tax paying bracket.
It is therefore important to not look at the number of registrations of taxpayers but rather the collections made.
5. Budget allocations: In the past budget, allocations were made towards projects like the 'smart city' but not much progress was made on them.
In the budget speech, the government will inform of how far these provisions have been taken ahead and in case any more allocations are being promised, how the expenditure will be met (sources of revenue).
6. Capital expenditure: Big promises with a long term in mind are often made. These are usually in favour of the poor and farmers, but the capital expenditure statement is not detailed out loud in the speech. The details will only be found when one looks at how much has been allocated to individual departments.
7. RBI Reserves: A controversial topic towards the end of 2018 was the transfer of "excess" reserve that the RBI is sitting on to the government. This year's budget is expected to mention the way forward in this regard.