Our budget speeches capture the evolution of government policy

No power on earth can stop an idea whose time has come and the emergence of India as a major economic power in the world happens to be one such idea.” With these lines, then finance minister Manmohan Singh commended the Union budget of 1991 that set in motion reforms to liberalize the Indian economy. The pivot to a liberalized market-driven economy was evident in the speech’s emphasis on “expanding the area for the operation of market forces”, “welcoming foreign investment”, “reducing over-centralization” and “excessive bureaucratism”. It was prescient in charting the path of our economy over the next three decades.

The central government sets the policy discourse and priorities for development of the economy. This is a critical role, as the limited resources of a developing country must be put to optimal use for improving common prosperity. In the absence of clear focus areas, government policy may be ineffective, markets confused and the electorate dissatisfied.

Budget speeches in India have been more than just an announcement of tax rate changes and fund allocations to government programmes. They encapsulate the central government’s view on the state of the economy and focus areas to drive growth and welfare.

Budget analysts usually pay attention to the numbers (its fiscal deficit, disinvestment target, welfare spending, etc). But the topics, terms and turns of phrase in budget speeches also throw light on the evolution of central government policy. We analyse a sample of budget speeches since the early 1990s to capture such shifts in impetus of government programmes and policies.

For this exercise, we combine two budget speeches from the beginning of each decade, starting 1990 (i.e. 1990-91 and 1991-92, 2000-2001 and 2001-2002, 2010-11 and 2011-12, and 2021-22 and 2022-23) and analyse the frequency of word usage in each decade. Keywords unique to budget speeches from each decade are categorized into themes and we analyse the pattern in their usage over successive decades. Methodology details are available on the CSEP website.

Our analysis suggests that budget speeches in India have focused on eight broad themes. These are: (i) infrastructure, (ii) technology and innovation, (iii) social security, (iv) human development, (v) food and agriculture, (vi) demographics, (vii) fiscal policy and (viii) boosting national income. The budget speeches reveal that over the last few decades, India’s economic policy has moved towards building more infrastructure, embracing digital innovation and rapid urbanization, and providing better education and healthcare to the country’s vast population.

While the emphasis laid on these areas has changed, the broad goals of economic policy have remained the same across decades. This illustrates ideological similarities among political parties in India when it comes to economic policy.

The announcement of infrastructure projects such as new railway lines, national highways, rural roads and port development has been a key part of our budget speeches. India’s gross fixed capital formation (GFCF) as a share of GDP (at current prices) has grown—from 23% in the 1990s to 28% in the 2000s and to 30% in the 2010s; our GFCF is expected to be 29% of GDP in 2022-23. The central government aims to double its capital expenditure to 3.3% of GDP in 2023-24 from an average of 1.7% of GDP in the 2010s.

The rising focus on infrastructure is also reflected in budget speeches of the last three years. Budget speeches of past decades talked of building basic infrastructure like roads and ports. There is now an emphasis on connecting and building synergies between existing infrastructure, with increased mention of metros, freight corridors, logistics, and most recently, the Gati Shakti programme that aims to improve the coordination of infrastructure projects.

Over the last 30 years, the central government has steadily adopted advancements in digital technology to improve administration and the delivery of welfare services. Between 2010 and 2020, the number of internet subscribers increased from 20 million to 830 million, and the share of electronic payments in total retail payments (in value terms) is estimated to have grown from 11% to 86%. ‘Digital’ was among the most frequently used words in the last three budget speeches. In recent speeches, ‘faceless and paperless’ tax assessments were announced and a push was given to domestic mobile phone manufacturing.

Recent budget speeches manifest the Centre’s push to adapt to and mitigate the dangers of anthropogenic climate change. Efforts to fight climate change increased in the early 2010s, with speeches focusing on expanding forest cover and adopting green technologies. The focus has increased in the early 2020s, as this decade’s budgets extensively talk about increasing solar generation capacity, lowering carbon emissions and encouraging sustainable mobility.

The proportion of India’s population living in urban areas has increased from 25% to 35% over the last three decades. This shift is also visible in budget speeches, as the mention of ‘rural’ has dipped consistently, while that of ‘urban’ has increased to be among the most-used words in recent speeches. Similarly, the mention of items relating to food and agriculture has declined, although budget speeches continue to appeal to ‘farmers’ as before.

Delivery of welfare remains a critical component of budget speeches. Within welfare delivery, the focus on human development through health and education has increased, while that on social security such as pension and food seems to have decreased. Cumulatively ‘health’ and ‘education’ were mentioned 29 and 37 times in the early 1990s and early 2000s, which increased to 70 in the early 2020s. The most recent budget laid emphasis on skilling and training across industries.

Since 2019-20, the government’s narrative has become more focused on building infrastructure, fostering digitization and ensuring targeted welfare delivery. These are worthy objectives and the Centre’s performance must be constantly tracked and evaluated on these fronts, because India’s emergence as a major economic power, as spoken of in the budget speech of 1991-92, is still in progress.

Ayush Khare & Shruti Gupta are, respectively, a former research associate and a research analyst at the Centre for Social and Economic Progress (CSEP)