In the Covid era, every Indian’s mantra is Survive, Revive and Thrive. To fulfil their aspirations, the government needed to offer a Budget that recognised the pain they have gone through, found ways to lift them up and equipped them with the resources to face the future. On the Himalayan slopes, India’s soldiers were looking at New Delhi for the best of weapons to confront their challengers. Smt Nirmala Sitharaman’s Budget failed to deliver on these and other crucial fronts.
The Finance Minister did not even mention defence in her speech. When we examine the figures, the defence budget has effectively remained stagnant with a mere 1% growth in expenditure. This increase does not even account for inflation, let alone the cost of upgrading the 68% of our weapons that are “vintage”. Under the Modi government, defence expenditure as a share of GDP has consistently fallen, while the gap between the military’s requirements and funding widens. What message are we sending to our brave jawans?
As with jawans, so with kisans. Allocations for agriculture and allied activities have been reduced. PM-KISAN faces a 13% cut, while market intervention and price support were slashed by 22%. Agriculture alone saw positive growth this year, when Q1 GDP had crashed by 24%. Rural India’s lifeline—MGNREGA—has seen a cut in allocation. The government continues to claim that it is providing a Minimum Support Price of 50% more than the cost of cultivation, whereas most farmers are forced to accept prices below MSP. Further, the government’s definition of MSP is inconsistent with the recommendations of the Swaminathan Committee, to the detriment of the farmer.
An agri-infra cess at Rs 2.5 on petrol and Rs 4 on diesel has been introduced. The Central government’s cesses have led to higher prices across the board, triggered inflation and hurt poorer sections disproportionately. There is a school of thought, which finds support in this government, that believes farmers to be freeloaders and calls for taxing agriculture. This group refuses to see how farmers indirectly subsidise a host of programmes. Higher levies on diesel are in large part borne by farmers.
Cesses are not shareable with the states. Revenues from cesses go only to the Union government while state governments will continue to be obligated to spend on agriculture and infrastructure despite significantly lower allocations. Squeezing states of finances has been a consistent policy of this government. GST revenues were not shared as per the historic agreement that got states to give up their taxation powers and they were forced to borrow—at higher costs—to cope with Covid.
Winning elections is more important to the Modi sarkar than governing. Thus, the Budget brazenly prioritised election-going states over others. The South Indian states of Karnataka, Tamil Nadu, Kerala, Andhra Pradesh and Telangana contribute handsomely to the Union government’s treasury and receive only a fraction of the revenues. Yet, infrastructure projects were announced only for Tamil Nadu, Kerala, West Bengal and Assam. Should Karnataka, which Madam Finance Minister represents, suffer because elections are not scheduled this year?
Micro, Small, and Medium Enterprises (MSMEs), India’s principal job-creating sector, received a cursory allocation of Rs 15,700 crore. Does the minister honestly believe this is enough to cater to the needs of six crore units across India that are in dire straits and have either shed jobs or closed down?
This Budget has not signalled any intent to rationalise and simplify the Goods and Services Tax (GST). The focus is on disinvestment and privatisation. Unfortunately, under this government, that can only mean panic privatisation and cronyism.
The banking sector is on the verge of a mega NPA crisis after the Covid lockdown. The RBI estimates that Gross NPA of public sector banks could touch as much as 16.2% by September 2021. Yet, the FM has allotted only Rs 20,000 crore for bank recapitalisation. Banks will be averse to lending unless they have adequate capital infusion from the government. Whither revival? The government has proposed the aggregation of NPAs into a “bad bank,” but without serious reforms to bank management, removal of political pressure in loan decision-making and the deepening of India’s bond market, this solution is just a band-aid for a deep structural problem.
Given the Covid-related disruption to schooling and the urgent concern about mass dropouts, education desperately requires resources. It faced an overall cut in allocations by 6.13%. Despite the Budgetary target of 6% of GDP set by the National Education Policy, the Departments of both School Education and Higher Education had their budgets slashed.
The fifth round of the National Family Health Survey shows that across India, malnutrition has worsened for children born between 2014 and 2019. At least one of the three key indicators of childhood undernutrition—stunting, wasting, underweight—has gone up in 14 out of 17 states. Instead of acknowledging and addressing this crisis, the Finance Minister gave us an eyewash by merging existing central schemes into “Poshan 2.0”, with an allocation that is barely 0.3% higher than its cash-starved predecessors. Overall, allocation for nutrition has fallen by 27% year-on-year. Clearly, this government does not value the health of the poor.
The Budget touts an astronomical 137% increase in healthcare outlay. This increase has been accomplished through some statistical skulduggery. Allocations for Water and Sanitation and the Finance Commission grants (Rs 49, 214 crore) were added to the Healthcare outlay along with the one-time cost of Covid vaccinations (Rs 35,000 crore).I am today reminded of Saint Basaveshwara’s words: kaLabEDa, kolabEDa, husiya nudiyalu bEDa, which means, “Do not steal, do not kill, do not lie.”
For this government, it reads:
Do not squeeze our poor through taxes and cesses
Do not let bad policies ruin our farmers
Do not fudge data and destroy
India’s credibility
Sadly, the Budget’s theme song of Atmanirbhar is actually a warning to the people of India. The
government is not capable of helping you out. You’re on your own! Take care!
Rajeev gowda
Chairman of the Congress party’s Research Department and former MP
(rajeevgowda@gmail.com)