The Union Budget 2023-24 comes at a time when the Indian economy slowed down before the pandemic struck, worsened during the 2 pandemic years and the post pandemic recovery is adversely impacted by the global economic slowdown moving towards a possible recession. Under these circumstances this budget should have addressed the central issues of increasing people’s purchasing power with job generation and boosting the growth of domestic demand.
This budget fails to meet this situation. On the contrary, it squeezes the government expenditures to reduce the fiscal deficit while giving further tax concession to the rich. This comes at a time when Oxfam report shows that the richest 1 per cent in India have cornered 40.5 per cent of the wealth generated in the last 2 years. It is, thus, a contractionary budget which will only aggravate the economic crisis.
The increase in total government expenditure for 2023-24 over the revised estimates for 2022-23 is a mere 7 per cent when the increase in nominal (with inflation) GDP over the same period is estimated to be 10.5 per cent. Thus, as a percentage of GDP there is a reduction in government expenditure. If interest payments are excluded then this expenditure is only 5.4 per cent more than last year. Once the implicit inflation rate of 4 per cent and increase in population of around 1 per cent are accounted for, this so called “people-centric” budget only mounts further attacks on the livelihoods of the vast majority of our population.
When the unemployment rate is at a historic high the budget reduces the MGNREGS allocation by 33 per cent. Food subsidy is cut by Rs. 90,000 crores. Fertilizer subsidy by 50,000 crores and petroleum subsidy by 6,900 crores.
Despite the devastation caused by the pandemic Rs. 9255 crores of the last year’s allocation for health remained unspent. Likewise, Rs. 4297 crores remained unspent in the education budget.
The already measly remuneration for ICDS Scheme workers sees no increase. The Gender Budget is only 9 per cent of the total expenditure. The SC Budget is only 3.5 per cent against a population of 16 per cent and the ST Budget is only 2.7 per cent against the population of 8.6 per cent. The hollowness of bombastic claims of doubling farmers’ incomes is seen in the reduction of PM Kisan Fund allocation from Rs. 68,000 crores to Rs. 60,000 crores.
The Government’s claims of a substantial increase in capital expenditures which will lead to employment generation are specious. The revised estimates of 2022-2023 show that the total capital expenditures including resources of public enterprise increased a mere 9.6 per cent, well below the 15.4 per cent increase in nominal GDP.
The tax exemption limit has been raised from Rs. 5 to 7 lakh providing some relief to the salaried sections. However, this will be more than offset by inflation and cuts in social sector expenditure making people spend more on essential services including health and education.
This budget continues to impose further attacks on fiscal federalism by squeezing resource transfers to the state governments. The revised estimates for 2022-23 show that these transfers were identical to what was transferred 2021-22 despite an 8.4 per cent inflation rate in 2022-23. Further conditionalities have been imposed on state governments for accessing loans.
The Finance Minister informed that the tax concessions to the rich and the overall tax proposals would lead to a revenue loss of Rs. 35,000 crores in 2023-24.
In order to provide much required relief to the people and boost domestic demand leading to an economic turnaround the budget should have done the following:
The CPI(M) will organize nationwide protest actions against the anti-people and contractionary content of this budget and seeking the implementation of the above demands from 22nd to 28th February 2023. All sections of the people who are vitally interested in safeguarding people’s livelihoods must rise in protest.