Open Forum

New Delhi, 7 February 2024

Interim Budget

WHO BENEFITS THE MOST?

By Dhurjati Mukherjee 

Budget analysis from various angles is found reflected in the media. Economists, financial experts, and others involved in the analysis rarely try to find out how much of the allocated sum reaches the lower segments of society, i.e., low-income groups, economically weaker sections and the poor. This aspect is necessary as around 60% of the population or more belong to the above category. 

Experts note that fiscal consolidation was attempted in the interim budget and there were no populist measures, such as reducing the tax slab or increasing the standard deduction so that the middle class pay less taxes. However, emphasis on infrastructure, specially railways with allocation of Rs 2.55 lakh crore needs to be appreciated. The three major economic railway corridors announced shall improve logistic efficiency, reduce costs, ensure safety and higher travel speed for passengers. Besides, the decision to roll out the first set of 10 Vande Bharat trains with sleeper facilities and converting 40,000 bogies to such standards shall enhance passenger comfort. 

The other positive aspects include the vision of ‘Viksit Bharat’ which emphasises a prosperous nation in harmony with nature and the steps outlined therein are welcome. Though the focus of assisting States in accelerating development of aspirational districts and blocks is well received, the target for each year and the funds to be disbursed have not been outlined.  

The interim budget allocates significant resources to bolster the green energy sector, with a focus on harnessing India’s vast offshore wind energy potential. One such notable initiative includes viability gap funding for development of 1 gigawatt (GW) of offshore wind energy, which is expected to play a crucial role in diversifying India’s renewable energy portfolio and reducing reliance on fossil fuels. Besides, there’s an ambitious goal to set up coal gasification and liquefaction projects capable of processing 100 metric tonnes by 2030 to diminish India’s import dependency on natural gas, methanol, and ammonia, while simultaneously promoting cleaner sources. There are plans too to set up one crore rooftop solar power units for households. 

As regards the farm sector, the government’s resolve to increase output of oilseeds, milk aquaculture production to help reduce dependence on imports for its food security and boost exports is a long-awaited step. Experts have been emphasising diversification of agriculture beyond crops to livestock and fisheries to increase farm income. For the masses, support for 20 million rural homes is possibly the only area of satisfaction as over Rs 50,000 crore has been allocated to PMAY-G for 2024-25, which is almost double the Rs 28,174 crore spent in the current fiscal, as per revised estimates.  

Inequality remains a key problem in the Indian economy and as per government data, per capita national income increased from Rs 72,805 in 2014-15 to Rs 98,374 in 2022-23 –a 35% hike. However, as known this is unequally distributed. A few big capitalists make some big investments, but these are not enough to offset the decline in medium and small enterprises or generate the much-needed employment. The big economic concerns are unemployment and underemployment, poor viability of farming, high food prices relative to workers’ incomes and inadequate access to basic services. 

Reacting to the interim budget, Congress leader and former finance minister P. Chidambaram had said the fundamental flaw in NDA’s approach to the economy and governance is it is biased in favour of the rich.“It is a government of the rich, by the rich and for the rich,” he said, pointing out further “the government is either ignorant or callous to the fact that the top 10% owns 60% of the nation’s wealth and earn 57% of the nation’s income and that income inequality has widened significantly in the last 10 years”. 

Regarding government’s claim that it was empowering women by increasing their participation in the work force, he said the Labour Force Participation Rate among urban women is 24% against 73.8% for men. Perhaps, the government increases workforce participation for women by including unpaid helpers in family enterprises who don’t get remuneration for their work. 

The other basic problem of the economy is the lack of momentum in the manufacturing sector, with weak private consumption and investment and a rising divide between strong high-end and subdued low-end purchases. Though there is much talk of fiscal consolidation, the basic economic problems remain unresolved. 

An important area that’s been the subject of much discussion is the health sector. The country has 166,000 Health and Wellness Centres. Beyond affordability and accessibility, the quality of healthcare is too poor and can in no way be compared with other emerging nations. As per the Asian Development Bank (ADB), the integration of quality into universal health coverage is yet to be adequately addressed. 

Apparently, there’s been a meager 1.7% rise in the budget for 2024-25 in the annual outlay for health programmes after slashing the current year’s health expenditure by Rs 8500 crore. This means a 4.3% decline in real terms, keeping in view inflation of 6%.As Chidambaram pointed out that the budget for health is 1.8% and for education 1.5% of total expenditure, “None of the boasts can be accomplished with such low expenditure.” 

The government’s claim of inclusive development has come under scrutiny as the National Campaign on Dalit Human Rights (NCDHR) found that Scheduled Castes and Scheduled Tribes had been allocated a paltry amount in the budget. The total estimated expenditure is Rs 51.08 crore, whereas the total allocation for the welfare of SCs is just Rs 1.66 lakh crore and even less for the STs at Rs 1.21 lakh crore. 

Undoubtedly, more resources are needed for welfare schemes, and this is only possible if taxations are increased. Organisations like Oxfam have repeatedly stressed the need to levy a wealth tax on the millionaires and billionaires of the country. Besides, there is need to impose an inheritance tax of at least 25% as in most other countries, including the US, it’s around 40%. But these suggestions sadly have been ignored. 

It’s basic knowledge that generation of more revenue will lead to increase in development expenditure. Most experts have been insisting on the need to increase tax to GDP ratio, which would of course affect the corporate. This too is being ignored by the ruling dispensation perhaps as some experts feel that top corporates may be making donations to the party and/or for temples etc. The inequality spectrum requires sustained attention.---INFA 

(Copyright, India News & Feature Alliance)