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Finance or Fiction?

By Varun Hari Prasad

On 23rd July 2024, the Union Finance Minister Mrs Nirmala Sitharaman presented her seventh consecutive Union Budget. With this being the first Union Budget after the Lok Sabha election, there was considerable enthusiasm towards the Budget.

The Impact of Election result on Budget  

The Budget speech of the Finance Minister clearly shows us that the Lok Sabha election result has shaken the BJP to some extent. The principal ruling party, known for its arrogant approach over the past ten years, was forced to accommodate some of the demands of its key allies the JDU of Bihar and TDP of Andhra Pradesh. The Finance Minister, who was dismissive about the unemployment crisis earlier, was forced to mention the words 'unemployment' and 'jobs' more than 20 times in the Budget Speech.

The Impact of Budget on the four 'castes'

In paragraph 4 of her Budget Speech, the Finance Minister said: "As mentioned in the interim budget, we need to focus on 4 major castes, namely ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth) and ‘Annadata’ (Farmer).". What has the Finance Minister given in the Budget for these four 'castes'?

  • 'Garib' (Poor)
One of the biggest problems affecting the poor of our country is inflation. The Whole-sale Price Index (WPI) inflation is at 3.4%, the Consumer Price Index (CPI) inflation is at 5.1% and food inflation is at 9.4%. Across the country we hear the people expressing their distress on price rise of essential commodities but the Chief Economic Advisor to the Government says that inflation is stable and is moving towards the 4% target. Why doesn't the Reserve Bank of India (RBI) or the Monetary Policy Committee (MPC) have the same confidence? If the RBI had faith in these numbers of the Government, why has it not reduced interest rates since almost a year?

The CEO of NITI Ayog says that India has almost eliminated poverty, if this is true, why is the Government giving free ration to 80 crore people?
  • 'Mahilayen' (Women)
The women of our country are dis-empowered mainly due to patriarchy, financial discrimination and regressive socio-economic practices. According to NCRB report published in December 2023 4,45,000 cases of crimes against women were registered. Male casual workers earn 48 per cent more than women and male regular-wage workers earn 24 per cent more than women. Labour Force Participation rate for urban women is 24.0 as against 73.8 per cent for men.

Boastful claims & catchy slogans of women empowerment and Nari Shakti is of no use unless these disparities are addressed.
  • 'Yuva' (Youth)
Despite being in office for ten years, this Government has not ensured that the demography of the country benefits the economy. As I had written earlier this year that according to the State of Working India Report (of Azim Premji University), the unemployment rate in youth between the age of 15-29 is 10%. Among graduates, the unemployment is 9.8% (between the age of 30-34) and among graduates under the age of 25, the unemployment rate is 42%.**

However, I appreciate the Finance Minister for accepting the idea mentioned in the Congress Party's Manifesto and announcing the Employment Linked Incentive (ELI) scheme. But in paragraph 51 of the Budget Speech, the Finance Minister has said that this ELI scheme is limited only to the top 500 companies. It remains to be seen if 20 lakh interns can be accommodated each year by these 500 companies.
  • 'Annadata' (Farmer)
The Finance Minister was vocal about farmers. But what missed in the Budget was that as per NCRB Report, there were 11,290 farmer suicides in 2022. It is also pertinent to note that the Government has spent lesser than the Budget Estimate in 2023-24 on key agricultural schemes such as Rashtriya Krishi Vikas Yojana, Pradhan Mantri Krishi Sinchai Yojana, Interlinking of Rivers, Urea Subsidy and Fertilizer Subsidy.

Despite the demands of farmers, the Government has failed to provide legal guarantee for MSP to farmers.

The 'Jumla' continues

Despite suffering an electoral setback, the BJP has continued with its Jumla policy. This time the Jumla is for Andhra Pradesh. Despite being in power for ten years, the BJP did not bother to fulfill the commitments made in Andhra Pradesh Re-organisation Act 2014 and the assurances made by then Prime Minister Dr Manmohan Singh on the floor of Rajya Sabha. Now that the survival of its Government depends on the TDP, the BJP has remembered Andhra Pradesh. But it is unfortunate that even now, the State of Andhra Pradesh has not got justice.

In paragraph 29 of the Budget Speech, the Finance Minister says that they will formulate a plan called Purvodaya, for the all-round development of the eastern region of the country covering
Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh. So unless the plan is announced, we will not know which of these states will get what facility and the allocation for it.

Also, in paragraph 33, the Finance Minister says that "Recognizing the state’s need for a capital, we will facilitate special financial support through multilateral development agencies. In the current financial year 15,000 crore will be arranged, with additional amounts in future years." (emphasis is mine) This clearly shows that the Union Government has not made this allocation for Andhra Pradesh but is only facilitating a loan which will have to be repaid by the Government of Andhra Pradesh!

In paragraph 36, the Finance Minister says that "Grants for backward regions of Rayalaseema, Prakasam and North Coastal Andhra, as stated in the Act, will also be provided." but does not specify how much grant will be provided.

Also, the Finance Minister has not said anything in the Budget Speech about providing Special Category Status for Andhra Pradesh, as assured by the then Prime Minister Dr Manmohan Singh on the floor of the Rajya Sabha.

Conclusion

Despite this being the first Budget of the new term, the Finance Minister, in my opinion, has not tried to bring path breaking reforms such as Direct Tax Code and other such reforms. It is also saddening to see less allocation for Education as a percentage of the Budget. The Budget does not specify any policy action to mitigate the problems of the 'Garib', the 'Mahila' and the 'Kisan'. While the Government seems to have acknowledged the problem of unemployment, the steps taken do not seem sufficient and does not inspire confidence, given their track record of Jumlas.

With jumlas, empty promises and hollow words, the Union Budget 2024-25, to me, seems more of fiction than about Finance.

** note: at present, there might be a change in the statistics mentioned above 
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Comments

  1. Jude David4 August 2024 at 18:08

    Another must read.
    A well thought out piece 👏
    Keep it coming Varun 👍

    ReplyDelete

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