Jayati Ghosh.
Credit: Twitter/@jayati1609
New Delhi: Finance Minister Nirmala Sitharaman's budget proposals are devoid of strategy to deal with problems of unemployment, price rise and farmer's distress, said eminent economist Jayati Ghosh.
The tiny sops given to the middle class, she said, are not enough to generate the kind of shift India needs to boost domestic demand.
"The problems of unemployment, inflation, farmer distress, viability of small and medium enterprises, and climate change -- the central problems of the Indian economy -- have not been addressed.
"The budget does not address any problems. While the government has been forced to recognise that these are problems, it is unwilling to do the kind of change and strategy necessary to actually address the problems," said Ghosh in an interview with PTI.
For instance, she added that there's almost nothing for farmers.
"There are tiny measures that are going to be a disappointment. I think farmers across India were expecting some kind of statement about formalising the minimum support price (MSP) system, if not given a legal backing," she said.
The government, she said, could have actively done something for the "desperate" young people of the country who want employment.
"They are struggling with a terrible education system and disastrous testing system full of scams, and there are no jobs at the end of it. You cannot allow this to continue," she added.
Also, sops like Rs 5,000 for an intern for 3 months is "nonsensical", she said, adding that "it really has to be a much bigger effort at job creation, including through public employment".
The measures like internship and subsidies announced in the budget are token measures copied out of the Congress manifesto, and are not going to make any difference, she said.
"The real problem in the Indian economy is the lack of demand, and that is feeding on itself. Not just big companies, but MSMEs are also not investing. That means no jobs are being created, and hence, no demand. It's a vicious cycle. This budget should have tried to change that," Ghosh noted.
The budget should have emphasised MSMEs and food security, and should have outlined ways for controlling the dramatic food price increases witnessed lately, she said.
"Private investment responds to demand. You're not doing anything to increase demand. Until you actively do measures that put money into the hands of ordinary people...higher wages, more employment, more jobs for young people...until that happens, there will not be more demand," she said.
On the abolition of the Angel tax, she said it will not have a noticeable impact.
Angel tax (income tax at the rate of 30 per cent) refers to the tax that the government imposes on funding raised by unlisted companies or startups if their valuation exceeds the company's fair market value.
"A few startups will benefit, but again, even with startups, we are getting much fewer startups today because of inadequate demand," she said.
On India's vision of becoming a developed nation by 2047, Ghosh said as long as India has "such terrible nutrition indicators, such low human development indicators, even if we have a high per capita GDP, we will not be a developed nation".
"You can't become a developed nation by just having a few very, very rich people -- multi-billionaires and trillionaires. You have to have most of your people actually doing better, and that's not happening," she said.
Union Budget 2024 LIVE | Making a record for any Finance Minister, Nirmala Sitharaman presented her 7th consecutive Union Budget on July 23, 2024 under the Modi 3.0 government. This Budget brought tax relief for the middle class, while focusing on jobs through skilling, incentivising employers. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.