Budget 2024: Freebies or welfare schemes, what can the Modi government opt for?

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We have had a continuous debate on what constitutes freebies and do some of them quality to be welfare schemes. For the government, certain schemes that could be announced in the interim Budget may be key, as Bharatiya Janata Party seeks a third term in the upcoming Lok Sabha elections.

Prime Minister Narendra Modi has opposed schemes from opposition-ruled state governments that offer cash or other incentives. He termed them as ‘revdis’.

“These days in our country, efforts are being made to distribute revdi (freebies) and gather votes. This revdi culture is detrimental to the country’s development. People, especially youth, need to be wary of this,” Modi said at a speech. “People endorsing this culture will never make new expressways for you, nor will they make new airports or defence corridors.

However, incentives or targeted benefit measures, seen as welfare schemes, are equally crucial for a country that houses the maximum population with significant income disparity. Treading the fine line between welfare schemes and freebies isn’t an easy task, on which economists have diverse opinions based on their understanding on what economic reform the nation requires.

The Indian government is likely to extend some form of social security to the country’s domestic workers, as a step toward universal welfare payments. Benefits include minimum wage, medical insurance, maternity benefits and provident fund, ET reported earlier in January.

Analysts have also said that the government may likely increase the quantum of funds transferred under the PM Kisan scheme by around 50 per cent. Economists also expect the government to focus specifically on its flagship housing scheme PM Awas Yojana.

“We expect some higher spending or rural schemes due to delayed rural recovery and some signs of distress due to erratic weather mostly in the current financial year (FY24) which implies marginal fiscal slippage or a fiscal deficit of ~ 6.2% of GDP vs the budgeted 5.9% of GDP,” Teresa John, Deputy Head of Research & Economist, Nirmal Bang Institutional Equities told ET Online.

Feb 01,2024

Source: Economic Times

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