By Nayakara Veeresha The union Budget 2022-23 has been hailed as growth-oriented in terms of physical and digital infrastructure development owing to increased capital expenditure. Most of the entrepreneurs, industrialists and corporate entities have welcomed it. No doubt these are necessities for an emerging economy like ours. However, the big missing link is the direction […]
By Nayakara Veeresha
The union Budget 2022-23 has been hailed as growth-oriented in terms of physical and digital infrastructure development owing to increased capital expenditure. Most of the entrepreneurs, industrialists and corporate entities have welcomed it. No doubt these are necessities for an emerging economy like ours. However, the big missing link is the direction of the Budget and its vision towards privatisation. This is not in consonance with the welfare state provisions as envisioned in the Constitution.
Higher outlays to selective infrastructure sectors such as Green Bonds, Scheme for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles India (FAME India), Electronics Manufacturing, Digital Rupee are insufficient to revive the economy, which is rooted in the informal sector. This is the third Budget in the midst of the pandemic, where the effects of first and second waves on the economy are still at the nascent stages of full recovery. Even sectors such as manufacturing and services are yet to attain the growth levels of the pre-pandemic period.
Against this backdrop, it is essential to understand and analyse the deviation of the Budget from the welfare state and its progression towards capital state. In spite of its declining contribution to the overall GDP, agriculture remains one of the keys to attaining V-shaped recovery pattern through an “agile” approach using the movement of certain high frequency indicators in other sectors. The agriculture and allied sector being the key component of rural development got Rs 1,51,521 crore compared with Rs 1,47,764 crore in 2021-22 (revised estimate with an increment of Rs 3,757 crore).
MGNREGA Crucial
The Economic Survey of both 2021-22 and 2022-23 has clearly indicated the crucial role of MGNREGA in providing economic livelihood for the rural poor since the lockdown in March 2020. International organisations such as the UNDP, World Bank and the ILO have recognised the critical role played by MGNREGA during the migrant workers’ crisis. Despite these, the budgetary allocation for rural employment programme was cut to Rs 73,000 crore from Rs 98,000 crore in the previous Budget.
One of the much-talked initiatives against the backdrop of agricultural market reforms is the Market Intervention Scheme and Price Support Scheme (MIS-PSS), which saw reduced allocations by more than half from Rs 3,596 in the revised estimate of 2021-22 to Rs 1,500 crore in 2022-23. Similarly, the allocation for Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) has marginally increased to Rs 68,000 crore from Rs 67,500 crore. This implies that the achievement of goal of doubling farmers’ income by enhancing the farmer’s net income through expanding market avenues for selling the agrarian produce is far from reality as promised in 2023.
The Centre for Monitoring Indian Economy (CMIE) indicates the increasing levels of unemployment in the post-pandemic period. In January, the unemployment rate stood at 6.57%, the lowest since March 2021. In this scenario, it is surprising to note the decreased allocation for ‘Jobs and Skill Development’ from Rs 2,753 crore to Rs 2,688 crore. Another missing link is the absence of allocation to the Mid Day Meals programme in the schools. The allocations made for the overall development of other vulnerable groups and Scheduled Tribes stand at Rs 1,931 crore from Rs 1,930 crore and Rs 4,111 crore from Rs 3,798 crore respectively.
Vulnerable Groups
Given the rise in out-of-pocket health expenditure augmented by the pandemic, the increase in allocation by Rs 1 crore for the vulnerable groups such as Divyang, transgender and older persons, as compared with the previous Budged, is highly insufficient to meet the day to day requirements. On a similar note, the increased allocations to the development of Scheduled Tribes and Scheduled Castes though looks impressive; however, a closer look at the variations between Budget and revised estimations casts doubts in terms of actual allocations.
To illustrate, the capital account disbursements for the ‘Welfare of Scheduled Castes, Scheduled Tribes, Other Backward Classes and Minorities’ have come down to Rs 191.70 crore from Rs 519.13 crore in the revised budget estimates of 2021-22 with the reduction of Rs 327.43 crore from the BE. Seen from this perspective, the allocation stands lower than the actual of Budget 2020-21, which stood at Rs 210.06 crore. The outlay for ‘Food Subsidy to Food Corporation of India under National Food Security Act’ and ‘Food Subsidy for Decentralized Procurement of Food grains under NFSA’ has substantially declined from Rs 2,10,929 crore to Rs 1,45,920 crore and Rs 75,290 crore to Rs 60,561 crore respectively, affecting the poor and thereby depriving them of the right to food.
No allocation was made for the ‘India COVID-19 Emergency Response and Health System Preparedness Package (Phase-II) (DBS) (CSS)’ programme. The expenditure for education remains at 3.1% of GDP, which is inadequate to achieve the goals of National Education Policy (NEP)-2020. Overall, the percentage of social services expenditure has declined from 38 to 36.6 in 2020-21 to 2021-22 with the allocation of 0.51% (as a share of total GDP in this year’s Budget) in 2022-23.
Migrant Workers
The Budget is silent about the plight of the inter-State migrant workers, especially in the urban areas. An urban employment guarantee scheme would have been a major push. The workers in the unorganised sector deserved a better deal along with providing a catalyst for the uplift of the rural industries. The marginal increase in the allocation for the overall urban development falls short in enthusing confidence among the urban people and casts shadows on the pace of return of migrant workers from the rural areas and their welfare at the workplaces.
Other glaring omissions are the lack of ideas and initiatives to deal with the rising poverty levels and the widening income inequalities in the post-pandemic scenario. The Budget also missed the opportunity to increase the revenue through taxing rich people in the wake of global minimum corporate taxation.
The reduction in corporate tax (from 34.32% to 25.17% from 2019-20 onwards) has direct ramifications on the social sector expenditure in addition to the failure in boosting corporate investment as a growth catalyst. From the foregoing figures and analysis, it can be inferred that the Budget is more inclined towards the capital state by deviating from the vision of social welfare and justice of the Constitution.