JANUARY 31, 2025

By TIOL Edit Team

BOTH, the President Droupadi Murmu and Prime Minister Narendra Modi have aptly uplifted the mood of the Nation on the budget eve. Both of them have articulated well the Government's resolve for Viksit Bharat (developed India) by 2047.

In her address to Parliament at start of the Budget session, Smt. Murmu stated: "We have only one resolution, one goal - ‘Viksit Bharat'! "She concluded her speech with a motivational chord:" When we move forward together, our future generations will surely witness a developed, empowered, capable, and prosperous Bharat in 2047."

Similarly, Mr. Modi, in his remarks at the start of budget session, dwelt on attaining this goal. He believed "this budget session will instil new confidence and energy, ensuring that 140 crore citizens will collectively fulfil this resolution." PM urged "all MPs to contribute to strengthening the vision of a developed India during this budget session."

With this, national focus obviously shifts to the Budget for 2025-26. In her budget speech for current fiscal year, Mrs. Nirmala Sitharaman had identified 9 priority areas "for generating ample opportunities for all "in the march towards Viksit Bharat. She had indicated that "Subsequent budgets will build on these, and add more priorities and actions."

Mrs. Sitharaman had said: "We will formulate an Economic Policy Framework to delineate the overarching approach to economic development and set the scope of the next generation of reforms for facilitating employment opportunities and sustaining high growth."

The first element of this framework emerged as Finance Ministry's reply to question by Parliamentary Standing Committee (PSC) on Tax-to-GDP ratio required to enter the comity of developed nations.

In its report on Department of Revenue's (DoR's) Demand for Grants for 2025-26 presented during December 2024, PSC paraphrased its question & DoR's replies as its recommendations.

As put by PSC, "Our country aspires to become a developed nation by 2047. This would mean graduating from a low-middle income to a high-income or middle-high-income country in the next 25 years or so. As the Department has stated, in the next 25 years, India's direct tax-to-GDP ratio should double itself and reach approximately 12%."

What we need is an all-inclusive Tax-to-GDP ratio combining Central, State and local taxes (both direct and indirect imposts). This ratio can prove handy in knowing how difficult or easy it would be to attain the resolve to become developed nation.

The Central Government ought to calculate and disclose the average annual growth in tax and non-tax revenue required for speedy drive towards Viksit Bharat. The buoyancy in tax revenue should be facilitated by both, broadening the tax base and reducing ever-rising tax arrears.

The Finance Ministry should also disclose debt as percentage of GDP needed to attain growth without fuelling price rise and without accelerating depreciation of the rupee.

On the expenditure side, the Government ought to indicate how much money as percentage of GDP is required annually for education, healthcare and public infrastructure, food security, energy security and defence. What would be a prudent limit for freebies doled out separately by the Centre and the States.

We also expect FM to shed light on pre-requisites for attaining developed nation status by ‘Viksit Bharat Strategy Room and NITI for States Portal'. Launched in March 2024, nothing much is known about its functioning. Apart from pre-requisites, the Government also needs to identify essential indicators that sets apart developed nations from other countries.

The exercise to identify indicators can begin with Government accepting the world bank's definition of poverty for developed nations and for lower middle-income countries in which India is currently placed.

Another vital indicator can be the average per capita GDP for Organisation for Economic Cooperation and Development (OECD) countries. Yet another indicator can be the average per capita availability of water and other natural resources.

The Government should factor in the average ranking for OECD countries on 12 key global indices such as that for happiness, rule of the law, open budgeting, financial secrecy, fiscal transparency, corruption and ease of paying taxes.

The Government also ought to disclose when it would join OECD as that would bind it from making timely disclosure of credible macro-economic data. The membership would also require India to enact new laws to comply with OECD conventions such as anti-bribery convention.

Ideally, the Government should tell the nation how it intends to transform India into a developed nation. For this, it has to get down to brass tacks. Three years of fervour and campaign for Viksit Bharat alone can't be sufficient for achieving the goal cherished by all. Let the annual Budgets serve as beacon for drive towards Viksit Bharat @2047.