Take the Finance Minister’s budget speech with a pinch of salt

How seriously should one take the finance minister’s budget speech, which not surprisingly sounded like a political speech in an election year with little heed to facts and reality. Even a cursory search revealed discrepancies between what the FM asserted in her speech and what the government and the RBI have shared with Parliament. They may not quite be compared to chalk and cheese but they come close enough.

Here are some stark examples:

FM: "There is effective and timely delivery of programmes and of large projects...All forms of infrastructure, physical, digital or social, are being built in record time”

As many as 411 central sector projects (each worth Rs.150 crore & above) have reported cost overrun and 837 projects are delayed, the government informed Parliament in the winter session.

FM: "Strengthening of the financial sector has helped in making savings, credit and investments more efficient."

Public sector banks managed to recover only Rs 1.61 lakh crore (15.5 per cent) of the Rs 10.42 lakh crore loans written off since 2014-15, the government admitted to Parliament

FM: "Previously, social justice was mostly a political slogan. For our government, social justice is an effective and necessary governance model."

In reply to RTI applications the government has maintained that it does not maintain data on whether the people who have died while cleaning septic tanks are overwhelmingly from Dalit / ST / Minority communities. It does, however, keep count of such deaths and provide compensation in such cases. In the last five years, 58 such deaths were reported and compensated from Gujarat alone, the Parliament was informed.

FM: “People are living better and earning better, with even greater aspirations for the future. Average real income of the people has increased by fifty percent.”

The per capita income or real income in 2023-24 is expected to be Rs 1.23 lakh, a jump of 57 per cent from 2013-14 when it was at Rs 78,348. The jump in per capita income from 2003-04, when it was Rs 47,370, to Rs 78,348 in 2013-14, however, went up by more than 65 per cent

FM: “The foreign direct investment (FDI) inflow during 2014-23 was $596 billion marking a golden era. That is twice the inflow during 2005-14.”

When repatriation carried out by foreign companies bringing FDI into India is accounted for, the picture changes. The FDI coming into India between 2005-06 and 2013-14 was at $259.7 billion. Between 2014-15 and 2022-23, it stood at $414.3 billion or around 60 per cent more than in the earlier period – not 100 percent. The ratio of total FDI to total GDP for 2005-06 to 2013-14 was at two per cent of the GDP (considering World Bank GDP data in current US dollar terms) while the ratio of total FDI to total GDP for the period 2014-15 to 2022-23 comes to 1.7 per cent of the GDP. FDI grows as the economy grows and investors see new opportunities to invest.

FM: “The Indian economy has witnessed profound positive transformation in the last 10 years. The people of India are looking ahead to the future with hope and optimism.”

The Indian economy does appear to be doing well and is expected to grow by 7.3 per cent in real terms adjusted for inflation. Private consumption expenditure, which forms close to 60 per cent of the economy, is expected to grow by just 4.4 per cent in 2023-24, the slowest in more than 20 years. This is the slowest growth since 2002-03 when private consumption had grown by 2.9 per cent. For the sake of comparison, private consumption growth from the end of 2013-14 to the end of 2018-19 had averaged 7.2 per cent per year.

So, take the Finance Minister’s speech with a pinch or two of salt, is what experts advise.