New Delhi, 1 February 2023
The union budget for the year 2023-24 is a typical BJP budget – talking high and performing low. Since 2014, the budgets presented by the BJP has coined a new phrase, with this year having the name ‘Saptarshi’ guiding us through the Amrit Kaal. But, if one goes through the 'budget at a glance', it can be seen that all the promises made in the past by this government have been left unachieved, like ‘housing for all’, ‘doubling farmer income’, ‘100 lakh crore investment in infrastructure in five years’, ‘five trillion dollar economy by 2024’, etc.
In the 2023 budget, the estimates of CGST collection are more than direct corporate tax. This shows the reluctance of the government to tax the wealthy and the privileged, which continues unabated, with the Finance Minister refusing to introduce wealth and inheritance tax, despite economists making a compelling case for it in view of the increasing inequality.
With the country looming with anger regarding unemployment and under-employment crisis among the youth, it was expected from this budget that there would be some major announcement to fill vacancies in government departments or central-sponsored schemes for unemployed youths. However, this did not find any reflection in the budget.
This budget provides no respite to the problems of the common man, youth, farmers or industrial workers. Rising prices and unemployment remain unanswered as before, with no pronouncement on minimum support price for farm produce. Rather, it is observed that the budgetary provision of food subsidy payable to the Food Corporation of India has been slashed from revised estimate of Rs. 2,14,696 crore to Rs. 1,37,207 crore; subsidy under National Food Security Act has also been reduced from Rs. 72,283 crore to Rs. 59,973 crore. Provision for urea subsidy has come down from Rs. 1,54,098 crore (Revised Estimate) to Rs. 1,31,100 crore. Nutrient-based subsidies have been slashed as well. The government’s flagship PMKISAN scheme has been allotted Rs. 60,000 crore as opposed to the Rs. 68,000 crore that was allotted in the current financial year.
Rural areas are still reeling under duress with workers not finding work on a regular basis, and despite this, when compared to the revised estimates of the current year, the MGNREGA budget has been cut to Rs. 60,000 crore, and food subsidy reduced by Rs. 90,000 crore.
Notably, the umbrella programme for the development of minorities has been allotted Rs. 610 crore, against the earlier budget of Rs. 1810 crore in the current fiscal.
Despite high inflation, the budget didn’t extend indirect tax relief on items of mass consumption to common people. The middle classes which were expecting relief in the form of income tax concessions were also left in lurch, with only limited income tax concessions extended to those who opt for the new tax regime. The expectation of the middle class of a flat tax exemption limit of Rs. 5 lakh for all income tax payers did not find resonance with the Finance Minister. Moreover, the salaried class has to contribute to the provident fund, may go towards housing loans and to pay a premium for medical insurance, which won't give them any relief from tax liability now.
The budget speech lays stress on the budget outlay for PM Awas Yojana which is being enhanced by 66 per cent, i.e., to over Rs. 79,000 crore. The reality is that the expenditure on PM Awas Yojna in the financial year 2021-22 was actually Rs. 90,020 crore! This characteristic financial jugglery defines the economic policy and budget making exercise of ruling dispensation.
The budget doesn’t provide relief to people as the public spending on major sectors such as education, health, rural development and social welfare has barely been increased, and is not even enough to cover inflation, and the increase in Central Government Capex to Rs. 10 lakh crore is being sold as a single pill for all diseases. The assumed multiplier effect of this 33% increase in budget allocation for Capex is to ensure downward pressure on GDP which is unlikely to materialise.
Taking cues from uncertain international economic situation, high commodity prices, interest rates and profitability scenario, in light of flat demand, the private capital expenditure won’t step in due to dependency on foreign direct investments and foreign institutional investors. What was needed was a sustained boost to domestic investment and aggregate demand in a holistic way which this budget failed to provide.
Despite this, the Economic Survey and Finance Minister’s speech claimed that the economy has recovered from the shock of the COVID-19 pandemic. The reality is that neither the recovery is complete, nor has it progressed in a way where welfare of workers, farmers and hard-working Indians has been taken care of. The ‘aapda mai avsar’ model adopted by BJP government during the pandemic has resulted in disproportionate disparities in income during COVID years due to rampant privatisation, selling of public assets and pushing economic burden onto ordinary people. While migrants, daily wage earners and farmers suffered severe distress during the lockdown, the wealth of favourite cronies of Modi government has ballooned. The recent Oxfam report shows that the richest 5% Indians own 60% of the country's wealth, while the bottom 50% owns only 3%, while contributing to 64% of the total GST collection.
The GDP numbers of financial year 2021-22 are almost at the same level as the pre-pandemic year of financial year 2019-20. The Economic Survey of last year had estimated the GDP to grow by 8 to 8.5 % for the financial year of 2023, but the actual numbers are now revised downwards at 7%. This also in a way is growth only in terms of GDP numbers of the financial year 2019-20, wherein the year itself saw the economy growing at less than 4%. For the financial year 2024, the growth in real terms is projected by the Economic Survey to be 6 to 6.8%, while nominal GDP is estimated to grow by 11%. With inflation surging above 6% on a consistent basis of late, the deflator seems to be fixed at a lower range, showing GDP estimates in better light. How it turns out in reality is for everyone to witness. But, the numbers can be taken only with a pinch of salt, as the tightening of liquidity, mounting current account deficit (CAD), weakening rupee, thus creating a macro economic environment in which policy leeway would be restricted, especially with government hands tied up in neo-liberal policy framework with pressure to keep fiscal deficit under check, is estimated at relatively high level of 5.9% of the GDP.
The fact that out of a total budget size of Rs. 45 lakh crore, more than Rs. 10.80 lakh crore is spent on just repaying interest on past borrowings, further puts the limit on possibilities of borrowing to increase government spending.
The 2023 budget is a betrayal of the people’s expectations of reducing economic inequality, increasing government expenditure on public services, enhancing employment opportunities and to provide relief from high prices.