The main reasons for the disappointing outcome are because the Budget makers lose touch with reality and fail to make an objective assessment of the economic situation.
Like many other earnest well-wishers of the economy, I always read, reflect and write on the eve of the annual Union Budget — and leave Parliament House often disappointed on Budget day.
Afterwards, I go back to the people and speak to persons from different walks of life including MLAs, economists, businesspersons, farmers, women, youth and, above all, party activists. The last-named give me feedback from the ground, especially the chatter in the local markets. In practically every year during the last 10 years, I found that the Budget ‘announcements’ vanished without a trace in 48 hours, and the chatter ceased.
Daunting Challenges
The main reasons for the disappointing outcome are because the Budget makers lose touch with reality and fail to make an objective assessment of the economic situation. Let’s take 2024-25 for which the Budget will be presented on July 23, 2024. An objective assessment of the economic situation will reveal that:
Unemployment is the biggest challenge to youth, families and social peace. For a few dozen vacancies or a few thousand posts, millions of candidates apply and write an examination or appear for an interview. Question papers leak. Bribes are paid. Some examinations or interviews are cancelled at the last minute causing great distress. These are the direct consequences of an explosive unemployment situation. According to CMIE, the all-India unemployment rate is 9.2 per cent. So-called jobs have increased in Agriculture (really, disguised unemployment), Construction (irregular) and the gig economy (insecure).
Youth want regular jobs with a modicum of security of tenure and fair wages. Such jobs are available in the government and government-controlled bodies. At the beginning of 2024, there were 10 lakh vacancies in such posts but there is no evidence that the central government is keen to fill the vacancies. Such jobs can also be created in a vibrant manufacturing sector and in high-value services like financial services, information technology, shipping, air transport, hospitality, healthcare, education, and research and development. Manufacturing output has stagnated at 15 per cent of GDP because Indian promoters have shown extreme reluctance to invest. The rapid expansion of manufacturing and high-value services requires a radical re-set of economic policies and a bold embrace of foreign investment and foreign trade.
Price rise or inflation is the other major challenge. Wholesale price inflation, as measured by the government, is at a high of 3.4 per cent. CPI inflation is 5.1 per cent and food inflation is 9.4 per cent. Since India is not a common market with free flow of goods and services to every part of the country, the rates vary from state to state and, within a state, from well-connected districts to poor and remote districts. Except perhaps the top 20-30 per cent of the population, every family has been hurt by inflation. Some are grumpy, most are angry.
Based on your degree of satisfaction that the Budget speech and the allocations have outlined credible steps to tackle unemployment and price rise, you may allot up to 50 marks.
Two Other Challenges
The remaining 50 marks may be allotted under the heads of education, healthcare and other people’s priorities. India will not become a developed country as long as we have sub-standard education and healthcare. Education, especially school education, is undoubtedly widespread but of poor quality. The reality is that a child spends, on average, 7 to 8 years in a school. Nearly one-half of the children are unable to read or write a simple text in any language and are numerically challenged. They are not fit for any skilled job. There are thousands of one-teacher schools. The schools have huge deficiencies of classrooms, toilets and teaching aids, not to speak of libraries or laboratories. The central government must drive — and help — the states to address these fundamental problems and not waste its resources and time on pushing a controversial NEP or a scandal-ridden NTA/NEET.
Healthcare is better but not sufficient. Public healthcare is growing quantitatively but not in quality. Out of pocket expenditure is still about 47 per cent of total health expenditure (NHAE, Ministry of Health and Family Welfare). Private healthcare is growing both in quantity and quality but is absolutely beyond the reach of the vast majority of people. Overall, there is a grave shortage of doctors, nurses, medical technicians, and diagnostic equipment and machines. The central government’s expenditure on healthcare has declined to 0.28 per cent as a proportion of GDP and to 1.9 per cent as a proportion of total expenditure (ToI dated July 15, 2024). Public satisfaction with public healthcare is low.
Hard, Harder Slap
Other people’s priorities are stagnant wages, rising household debt, falling consumption of wage goods, legal guarantee for MSP, burden of education loans and the Agnipath scheme. These challenges have solutions: minimum wage of Rs 400, legally guaranteed MSP, education loan forgiveness, and abolition of Agnipath.
Neglect, bordering on derision, of these issues caused the disastrous slide in the number of seats won by the BJP in the Lok Sabha elections of 2024. The BJP is not repentant. Nor, going by public statements, is it willing to reconsider its model: crony capitalist, trickle-down, capital biased and protectionist. The people gave the BJP a harder slap in the 13 Assembly by-elections in July: the I.N.D.I.A. bloc won 10 of them and increased their vote share dramatically (The Hindu dated July 17, 2024). Will the Budget respond to the warnings on the wall? Keep your fingers crossed.
