On July 23, 2024, Ms Nirmala Sitharaman, the Hon’ble Finance Minister (FM), presented the Budget for 2024-25. A discussion on the Budget commenced in both Houses of Parliament the next day. The FM “replied” to the discussion in the Lok Sabha on July 30 and in the Rajya Sabha on July 31.
- The government is spending more money under each head of expenditure.
The expenditure, according to the FM, is a measure of good governance. Consequently, all sections of the people are benefited by ‘development’ and ‘welfare’. The FM buttressed her argument by numbers: what was spent in 2013-14, the last year of the UPA government; what was spent in 2019-20 and 2023-24, the first and last years of the NDA II government; and what will be spent in 2024-25. The numbers showed, naturally, an increase from year to year — in absolute terms. For example, the FM said “Just Rs 0.30 lakh crore was allocated to agriculture and allied sector in 2013-14 whereas it is now Rs 1.52 lakh crore. It is even Rs 8,000 crore more than the last year of 2023-24. So, over the last years, we have made an increase in it and not brought about a reduction on it.” The catch is, the numbers were in current prices, not in constant prices. Besides, the claim of enhanced expenditure will be relevant only if it is expressed as a proportion of total expenditure or as a proportion of GDP.
Further, there were several heads under which the allocated funds were not spent in 2023-24, and not explained why:
- The problem of unemployment does not exist.
The FM said that the policy of the government was saksham, swatantra and samarth (meaning, competent, independent and capable). She trotted out the familiar numbers: the Periodic Labour Force Survey claimed that unemployment had declined to 3.2 per cent. The SBI research report found that 125 million jobs had been created between 2014 and 2023. Both were government reports. They were contradicted by the CMIE data which estimated the current unemployment rate as 9.2 per cent. The ILO report revealed that of the unemployed in India, 83 per cent were youth. The FM did not answer the question why for a few hundred or a few thousand jobs there were thousands or millions of candidates? For instance
n U.P. Police Constable Recruitment Examination: for 60,244 positions, over 48 lakh candidates (including around 16 lakh women) wrote the examination.
n Staff Selection Commission, U.P.: for around 7,500 posts there were 24,74,030 applications.
If unemployment had declined so steeply, why was the ratio of applicants/candidates to jobs so grossly disproportionate? In the two instances above, the ratio was 1:80 and 1:329. Why were engineers, management graduates, lawyers and post-graduates applying for the job of a constable or clerk? In order to find out the truth about unemployment, I suggest that the prime minister and other ministers walk the streets of towns and cities of India. On a lighter note, the finance minister may begin her walk at Madurai (where she was born), go to Villupuram (where she went to school) and end at Tiruchirappalli (where she went to college).
- Our inflation rate is better than yours.
The FM said, “The UPA government was run by the Harvard and Oxford educated leaders for the economy. They did not know when and how to withdraw the stimulus leading to a high double-digit inflation between 2009 and 2013.” (Wisely, she did not take any name because it may have embarrassed her government.) The FM was technically correct but, I am afraid, not relevant. The people do not live in the UPA era; they live in the time of Modi 2.1. They live in a time when prices of tomato, onion and potato have risen year on year by 30 per cent, 46 per cent and 59 per cent, respectively (source: CRISIL). They live in a time when WPI inflation is 3.4 per cent; CPI inflation is 5.1 per cent; and food inflation is 9.4 per cent. They live in a time when wages of all categories of workers had stagnated during the last six years. When the people voted in April-May 2024, they did not vote against the inflation during the UPA government but voted against the inflation during the term of the Modi government. The FM proposed no idea to mitigate the burden of inflation: no reduction in administered prices, no reduction in taxes or cesses, no increase in minimum wages, and no measures to stimulate the supply side. She quoted the 15 words of the Chief Economic Adviser on inflation — “India’s inflation continues to be low, stable and moving towards the four per cent target” — and dismissed the subject. She did not answer a pertinent question: if inflation management was so admirable, why was the RBI keeping the bank rate at 6.5 per cent for the last 13 months and with no prospect of any reduction in 2024?
The Budget received a cold reception from the average citizen. Even the cheerleaders were sceptical and cautious. The FM alone did not seem to feel the chill. At the end of the FM’s reply, many others and I were in the same state of advanced wisdom as we were when she presented the Budget.
