The interim budget of 2024-25 (also called the Vote on Account) was never expected to make any bold announcements. Instead, it was intended to showcase the performance of the National Democratic Alliance (NDA) government and announce popular schemes in view of the upcoming general elections. Maybe it was less on popular schemes. But the Union Minister for Finance did not disappoint us in claiming that the past decade was the best anyone could have ever asked for.
Nirmala Sitharaman said:
…(When the) Government, under the visionary and dynamic leadership of Hon’ble Prime Minister Shri Narendra Modi, assumed office in 2014, the country was facing enormous challenges. With Sabka Saath, Sabka Vikas as its ‘mantra’, the Government overcame those challenges in right earnest. Structural reforms were undertaken. Pro-people programmes were formulated and implemented promptly. Conditions were created for more opportunities for employment and entrepreneurship. The economy got a new vigour. The fruits of development started reaching the people at scale. The country got a new sense of purpose and hope. Naturally, the people blessed the Government with a bigger mandate.
But what did some of the economic indicators, leading upto this budget, tell us?
Unemployment levels were at 9.2 per cent in November 2023, according to Centre for Monitoring Indian Economy (CMIE) data. Unemployment was at 10.1 per cent in October 2023.
Food inflation in December 2023 was at 9.5 per cent nationally and 10.42 per cent for urban consumers.
The government continued to ignore the agriculture sector despite having withdrawn controversial farm laws due to a valiant struggle by farmers. Some 100,474 farmers died by suicide from 2014-2022, according to a National Crime Records Bureau report. This amounts to nearly 30 suicides per day in these nine years.
The unorganised sector employs 90 per cent of India’s workforce. It has never recovered from the impacts of demonetisation, an unplanned national lockdown and a harsh GST regime. Nearly 25,000 units MSME segments in the country closed their operations in the past three years — the post-COVID period — according to information in a reply given by Bhanu Pratap Singh Verma, Union Minister of State for MSMEs in the Rajya Sabha in July 2023.
Crony capitalism and appeasement of the corporate world continued unabated. Certain corporations continued to get all major businesses — whether ports, airports or even green hydrogen projects. The corporate tax cut brought in during COVID-19 — presuming that the formal sector will boost employment and help the economy recover — resulted in a loss of tax revenue of Rs 1.84 lakh crore in 2019-20 and 2020-21. Despite the intention to boost economic activity, the tax cuts did not lead to increased corporate tax collections or significant economic growth. Neither did the reduction in the tax rates lead to an increase in capital expenditure by corporates or job creation.
Banks have written off bad loans worth Rs 14.56 lakh crore in the last nine financial years starting 2014-15. Of this, written-off loans of large industries and services stood at Rs 7,40,968 crore.
Wealth inequality continues to widen the gap between the ultra rich and the poor. The top 10 per cent of the Indian population holds 77 per cent of the total national wealth. Some 73 per cent of the wealth generated in 2017 went to the richest one per cent, while 670 million Indians, who comprise the poorest half of the population, saw only a one per cent increase in their wealth.
India’s rank in the World Hunger Index slipped from 107 in 2022 to 111 in 2023, with a score of 28.7, which is under the ‘Serious’ category according to the Index.
Budget estimates and the revised estimates for 2023-24 reveal that the government spent less on agriculture, education, health and social welfare sectors, than it budgeted for.
It is in this context that we approached the interim budget. Rather than addressing these issues, the budget speech was reduced to unsubstantiated claims and dangling the carrot of prosperity in future yet again.
Sitharaman said, “People are living better and earning better, with even greater aspirations for the future. Average real income of the people has increased by 50 per cent.” The government’s own data (PLFS survey) shows a reduction of about 25 per cent in real monthly regular wages from 2017-18 to 2022-23. In addition, sales of fast-moving consumer goods (FMCG) — an indication of increased incomes — in value terms faltered in the October-December quarter of 2023, with even urban sales showing a decline, according to data from retail intelligence firm Bizom.
Higher inflation rates have adversely affected household savings, which crashed to a multi-decade low in 2022-23. The latest data from the Reserve Bank of India on household savings shows India’s gross financial savings rate declined from 15.4 per cent of gross domestic product in 2020-21 to 10.9 per cent in 2022-23. The net financial savings rate has declined from 11.5 per cent to 5.1 per cent.
The minister announced that around 40,000 trains running as part of the Indian Railways will be upgraded to Vande Bharat trains, ignoring the real conditions of an average traveller. According to the Railway Minister, “Some 95.3 per cent of total passengers travelled in general and non-AC sleeper coaches while only 4.7 per cent travelled in AC coaches”. Yet the focus is on Vande Bharat trains and not improving the conditions of non-AC coaches. As per the Comptroller and Auditor General report of 2022, the combined shortfall in the money needed for the renewal of tracks amounts to Rs 1,03,395 crore, which was not a priority for the minister, despite the tragic train accident at Balasore that left at least 292 people dead.
The minister spoke about the empowerment of women through entrepreneurship, ease of living, and dignity for them that has gained momentum in these 10 years. After falling for years, women’s Workforce Participation Rate increased, according to State of Working India 2023 report. But not for the right reasons. After falling or being stagnant since 2004, female employment rates have risen since 2019 due to a distress-led increase in self-employment. Before COVID-19, 50 per cent of women were self-employed. After COVID-19, this rose to 60 per cent. As a result, earnings from self-employment declined in real terms over this period. Even two years after the 2020 lockdown, self-employment earnings were only 85 per cent of what they were in the April-June 2019 quarter.
The biggest of Sitharaman’s claims was that “with the pursuit of Sabka ka Saath in these 10 years, the Government has assisted 25 crore people to get freedom from multi-dimensional poverty”. Economists have debunked this study by the NITI Aayog, based on which this claim is made. Economist Santosh Mehrotra says, “Since there is no year-by-year data for the 12 indicators (12 sustainable development goals-aligned indicators on health, education, and standard of living), just a straightforward compound annual growth rate projection is carried out by NITI, assuming that United Progressive Alliance period improvement rates between 2005-6 and 2015-16 in the 12 indicators applied to two years (2015 and 2016) of the NDA government’s term of office. There is no prima facie reason for assuming that the 7.9 per cent per annum GDP growth rate would deliver similar results to a period when the GDP growth rate for the recent 9 years fell to 5.7 per cent per year.”
When India experienced extreme weather events almost every day in the first nine months of 2023 which led to nearly 3,000 deaths, according to a report by Delhi-based non-profit Centre for Science and Environment, this budget was expected to announce some substantial measures to tackle the climate crisis. The minister announced promoting climate resilient activities for the blue economy. A plan to exploit oceans and its resources purely for economic gains can never be climate resilient, however we try and greenwash it.
May be one commendable thing about this budget is the announcement of rooftop solarisation of 10 million households. However, when large solar parks are promoted at the cost of local livelihood and commons, and when the emphasis continues to be on fossil fuel-based energy sources, with oil exploration and coal mining as priorities, rooftop solarisation would hardly mitigate the impacts of all those. In addition, the minister announced Rs 11 lakh crore on infrastructure development, which will further have a detrimental impact on climate.
This budget is high on claims, less on substance. And an impending election cannot be the only excuse to take citizens for a ride yet again.
This article was originally published in Down to Earth and can be read here.
Photo credits: @rashtrapatibhvn / X
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