The Indian budget is an important indicator of the government’s financial policy and economic strategy. For the past five years, the Indian budget has gone through a roller coaster of highs and lows, while also introducing some path-breaking announcements. In this blog post, we’ll look at the history of the Indian budget over the past five years, highlighting the major changes, accomplishments, and failures along the way. From tax cuts to spending reforms, we’ll explore how the Indian budget has evolved over the last five years and how it has impacted the country.
Table of Contents
The global economic crisis
The Indian economy has experienced tremendous changes in the last five years. In 2016, the Indian economy was hit by a global economic crisis, which sent shockwaves through its markets. This had a significant impact on India’s fiscal budgeting, leading to a slowdown in growth and increased pressure on the country’s resources. The government responded by implementing several measures to contain the crisis, such as cutting interest rates and increasing public spending.
Despite these efforts, the Indian economy continued to suffer from the crisis until 2017, when it began to recover. The government was able to bring the economy back to health with the help of prudent fiscal policies. This period saw an increase in government expenditure and a revival of the economy, particularly in rural areas. In addition, several measures were implemented to encourage private investment, such as tax cuts and incentives for entrepreneurs. As a result, the Indian economy was able to weather the storm of the global economic crisis.
The return to fiscal consolidation
The Indian government embarked on a path of fiscal consolidation in the wake of the global economic crisis of 2008. Fiscal consolidation is a policy whereby government spending and taxation are used to reduce budget deficits. After the crisis, India started to focus on reducing its fiscal deficit, which ballooned to 6.5% of GDP. To achieve this, the government implemented measures such as public sector divestment and encouraging foreign direct investment. These measures, along with other reforms such as the introduction of the Goods and Services Tax (GST) in 2017, resulted in a decrease in the fiscal deficit from 6.5% of GDP in 2009 to 3.3% in 2017. This helped India become one of the fastest-growing economies in the world. It also helped the government to regain control over its fiscal policies and build a sustainable budget for the long term.
The implementation of GST
In 2017, the Government of India introduced the Goods and Services Tax (GST) as a major tax reform. It replaced several indirect taxes with one unified tax structure across the nation. This was done to bring uniformity and transparency to the taxation system.
GST has made life easier for businesses by eliminating cascading of taxes, simplifying compliance, increasing efficiency, and improving cash flow. The GST regime has reduced the burden of tax collection on businesses, making them more competitive in the market. In addition, the GST Council ensures that all stakeholders are consulted before any changes are made.
The introduction of GST has also benefited the common man, as it provides relief from multiple taxes and streamlines the entire taxation process. It is estimated that GST could add up to 2 percentage points to India’s GDP growth. In addition, it is estimated to increase government revenues by over 20%.
The implementation of GST has proved to be a game changer for India’s economy, paving the way for future economic growth and development.
The introduction of demonetisation
In 2016, the Indian Government took a revolutionary step towards curbing black money and terrorism by demonetising the two highest-denomination currency notes in the economy – Rs. 500 and Rs. 1000. This move was aimed at wiping out almost 86% of the currency in circulation at the time. It was announced on 8th November 2016 by Prime Minister Narendra Modi. Demonetisation was implemented as a one-time measure to fight corruption, and check black money and terror financing.
The demonetisation move had a huge impact on the Indian economy. Even though there was some disruption in the short term, it has helped in the long term by creating an environment conducive to transparency and accountability. There have been reports that cash deposits worth more than Rs 2 lakh have come down significantly after demonetisation. This is because people are reluctant to hold large amounts of cash due to fear of detection. In addition, cash payments have also decreased significantly, which is leading to better tax compliance.
The launch of Ayushman Bharat
The Ayushman Bharat scheme was launched in 2018 to provide quality healthcare services to the Indian population. It is a centrally-sponsored health insurance scheme that provides cashless and paperless access to secondary and tertiary healthcare services. The scheme covers over 500 million people and offers up to Rs. 5 lahks per family per year for medical expenses.
The scheme has been credited with reducing out-of-pocket expenditure for medical treatment and improving access to quality healthcare services. It also has the potential to reduce morbidity and mortality in the country by providing financial protection against catastrophic healthcare expenses.
Ayushman Bharat is also intended to reduce the dependence on private health insurance, as it reduces the burden of paying for expensive treatments from out-of-pocket expenses. The government hopes that this will help reduce the prevalence of poverty due to health care costs and help India move towards achieving Universal Health Coverage.