The last full Budget before the 2024 general elections is not only an exercise in futility but is also tone-deaf to the realities of the society and India’s neighbourhood. Like always, the Government cheerleaders claim that the Budget is historic, but if one looks beyond the surfeit of terms like Amrit kaal, Shri Anna, Karmayogi, etc, one finds that it is neither for the masses nor for long-term growth potential of the economy.
The biggest failure is the refusal of the Government to increase defence expenditure in any meaningful manner. For the first time in decades India’s defence allocations have dropped below two per cent of the nominal GDP. The growth in defence expenditure has even failed to keep pace with the rise in nominal GDP. The capital expenditure for defence has seen a very small increase from Rs 1,50,000 crore (RE) in 2022-23 to Rs 1,62,000 (BE) for 2023-24. For a Government that loves to claim its nationalist credentials at the drop of a hat, it is not surprising at all that the subject of defence was not mentioned in the Budget speech of the Finance Minister at all. The UPA Government under the Congress devoted more than 2 per cent of the GDP to defence and the BJP at that time used to shout that the allocation was not adequate and it will increase defence allocation when it came to power.
It must also be reminded that the India-China border was largely peaceful during that period and now that the possibility of a border clash between the two countries is a real possibility, the defence sector has been given a short shrift. It is also very likely that the subject of defence was not mentioned in the Budget so that it does not antagonise China and if that’s the case then it’s indeed shameful.
A lot of noise is being made by the Government on its target to reduce the fiscal deficit to 5.9 per cent of GDP next year. If one looks beyond the headlines, one can easily see that the fertilizer subsidy in the coming year will come down drastically as the global prices, which had spiked after the start of the Russia-Ukraine war, have cooled down. Moreover, the Government has also stopped the free food grain distribution that it had started in the wake of Covid-19 pandemic and therefore the food subsidy will also come down. The planned reduction on the fiscal deficit therefore is not a result of sound fiscal management by the Government but is a result of factors beyond its control.
Another aspect of the Budget is that the numbers presented are not honest. While the budgeted increase in capital expenditure is hogging the limelight, revenue expenditure has not been subjected to the scrutiny it deserves. The budget for 2023-24 has projected only a marginal increase in revenue expenditure over the revised estimate for the current year. In fact, if the interest payment is subtracted from the revenue expenditure, the amount is lower than revised estimates for the current year. This is clearly unrealistic and it is very likely that the actual revenue expenditure will exceed the Budget estimates. Moreover, it does not take much to puncture the claim of the Government on achieving very high Central Government capital expenditure as a percentage of GDP. The Government in its last 10 year period has raided the retained earnings of the public sector enterprises as a result of which the capital expenditure by PSUs has come down.
The Government’s only objective seems to win praise from business newspapers and industry bodies. These people dominate any post budget discussion and the concerns of rural and the poor masses are always relegated to the background. The allocation to Mahatma Gandhi National Rural Employment Guarantee scheme (MNREGA) has been reduced dramatically and the overall allocation to rural areas has come down. The Government likes to pretend that the country has fully recovered from the economic effects of Covid-19 but that is far from the truth. There is still widespread suffering in the rural areas and the Budget should have made increased allocation for the rural sector.
Unemployment is the biggest challenge facing our country but the Budget has nothing substantial for it. It seems that the youth will have no future to look forward to under the Modi Government. There was a lot of discussion on tourism in the Budget. It was projected as a magic pill to address the issue of unemployment in the country. However if one looks at the total allocation to the sector, it remains unchanged from what was allocated to it in the 2022-23 at Rs 2,300 crore.
The Budget is an all-round failure because it fails to prioritise its spending to areas that deserve urgent and continued attention of the Government. It criminally ignores 90 per cent of India’s population and Indian voters will pay back in the coming State elections and the general election in the coming year.
(The writer is spokesperson, Uttarakhand Congress Committee)