The first post-Covid budget of the Modi government makes no attempt to arrest and reverse the dangerous down slide of the economy, and provide immediate relief to the most affected sections of people who have lost jobs and suffered major erosion in income and livelihood. Instead, the budget follows the direction of transferring the burden of the crisis to the people while providing India's big corporations with increasing opportunities for wealth accumulation.
The economy needs increased public investment and expenditure, but the budget has focused on wholesale disinvestment and privatisation.
The budget needed to focus on job creation and direct transfer of income and purchasing power to the common people. Such a focus is conspicuously missing.
India's top 100 billionaires saw an enormous increase in their wealth (nearly 13 lakh crore rupees) during the pandemic and lockdown. The budget makes no attempt to tap into this wealth by way of measures like wealth tax or transaction tax.
Instead of reforming India's revenue policy by ensuring increased revenue collection from the super rich and granting some relief to the middle class through reduction in GST and income tax relief, the budget continues to follow an extremely regressive revenue policy.
The longstanding farmers' demand for legal guarantee of fair MSP for all crops has once again been denied by the government. Indebtedness is a pressing problem for India's small farmers and Microfinance loanees. The need for a universal waiver of all small loans is being acutely felt across the country and the budget has betrayed this key demand
MNREGA is a lifeline for the millions of migrant workers who returned to their villages during the pandemic lockdown. Budget 2021-22 allocates Rs 73,000 crore for MGNREGA. This amount is Rs 38,500 crore less than, and 34.52 per cent below the Revised Estimate of Rs 111,500 crore for 2020-21. Clearly the allocation is inadequate and cannot address the demand for rural jobs.
The Budget did not introduce any urban jobs scheme on the lines of MNREGA as advised by many experts.
The Ministry of Labour and Employment has been allocated Rs 13,306.5 crore, Rs 413 crore less than the revised estimate for 2020-21. Of this, the allocation for existing social security schemes for workers is down 3.4% to Rs 11,104 crore.
The MSME (micro, small and medium enterprises) sector that employs nearly 40% of the country's informal workers, was worst hit by the lockdown with many small units going bankrupt. India Spend found that “While the allocation for the MSME ministry in 2021-22 doubled from the current financial year's budget estimate of Rs 7,572 crore to Rs 15,700 crore, 64% of the allocation is for the Guarantee Emergency Credit Line (GECL) facility, a scheme for providing fully guaranteed and collateral-free credit to MSMEs, business enterprises, individual entrepreneurs and Micro Units Development and Refinance Agencies (MUDRA) borrowers.”
No allocation for social security for informal and unorganised workers.
In the midst of a raging farmers’ movement the 2021 Budget claimed it was a “kisan budget” (farmers’ budget). Is this true?
Overall, the budget for agriculture and allied sectors was cut to Rs 1.48 trillion in 2021-22 (budget estimates) from Rs 1.55 trillion in 2020-21.
PM-Kisan spending has fallen by Rs 10,000 crore - from Rs 75,000 crore to Rs 65,000 crore
There are two schemes meant to ensure MSP: MIS-PSS (market intervention scheme and price support scheme) and PM-AASHA scheme. On both of these only Rs 1,900 crore have been allotted (Rs 1,500 crore for MIS-PSS and Rs 400 crore for PM-AASHA).
Agriculture infrastructure fund used for APMCs augmentation has been allotted only Rs. 900 crore.
Out of a budget of Rs 34 lakh crore, a mere Rs 1.5 lakh crore was allotted to farmers. This is 4.4% of budget. Percentage wise is even lesser than the last budget (around 5%), and even in absolute terms it is marginally lesser.
The Budget announced an Agri Cess of Rs 30,000 crore. A CAG report shows Rs 94,000 crore worth of education cess went unused. 90% of Nirbhaya funds cess collected remained unused according to government data. If the Government did not keep its promise in education and women’s safety, why will it do so in agriculture infrastructure? As it is, Agriculture Research and Development spending is just around 0.3% of Agricultural GDP in India (one of the lowest in the world!). Moreover, this number has declined from 0.31% in 2011-12 to 0.24% today.
The Budget 2021-22 fudged accounting to inflate the health budget on paper.
The finance minister claimed an increase of 137% over the 2020-21 health budget. But this figure was derived by adding Water and Sanitation to the health budget (unlike in previous budgets). It is also derived by adding a one-time expenditure of Rs 35,000 crore on vaccines. Also, the finance commission grants to states are added to pad up the health budget. The actual expenditure on Department of Health and Family Welfare has risen from Rs 62,000 crore to just Rs 71,000 crore.
The 2021 Economic Survey showed that an increase in public health expenditure from the current levels in India to 3% of the GDP can reduce out-of-pocket expenses (OoPE) from 60% currently to about 30%. The Economic Survey therefore makes a case for increasing public spending on health from 1% to 2.5-3% of GDP, as the National Health Policy (NHP) 2017 states. But the Budget does not in fact deliver on this recommendation.
Despite facing the biggest health crisis in recent history, the actual government spending on health has increased by only 10%. For 2021-22, India's health ministry has been allotted Rs 73,931.77 crore ($10.12 billion). This is up 10.16% from the budget estimate for 2020-21, but down 10.84% from the revised estimate for the current financial year.
Spending on nutrition-related schemes fell from around Rs 28,000 crores to Rs 20,000 crores.