Slogans, acronyms, and self-congratulation

The interim budget speech of the Finance Minister was, as usual, full of bombastic slogans, cringeworthy acronyms, and self-congratulation. Budget speeches are essentially monologues without any real-time fact-checks to expose whether the numbers and their implications are accurate. Here’s the reality check.

Consider GDP growth. Under the NDA, since 2014, it has averaged 5.7 per cent, whereas it was 7.6 per cent during the UPA years. The fiscal deficit has averaged 5.13 per cent under NDA, compared to 4.63 per cent under the UPA. The International Monetary Fund has noted with concern that India’s debt-to-GDP ratio has crossed the 80 per cent mark. 

The Modi government was blessed with low international oil prices and two majority mandates. It had a golden opportunity to usher in the next generation of structural reforms. The most impactful economic decision this government made, and which does not feature in speeches anymore, was demonetisation. 

Demonetisation devastated India’s vast, cash-driven informal sector, and the economy continues to feel the pain. Demonetisation was followed by a hastily implemented Goods and Services Tax regime which further slowed growth and hamstrung MSMEs. Before the Covid-19 pandemic hit, economic growth had been continuously declining, falling to 4 per cent in 2019-20. The post-pandemic economic performance, averaging 3.5 per cent GDP growth, is unsustainable for a country aspiring to enter the middle-income ranks.

The budget emphasised GYAN -- Gareeb, Yuva, Annadata, and Naari -- the poor, youth, farmers, and women, which PM Modi has asserted are India’s four castes that need attention. The budget speech conveniently obfuscates the reality they face. 

Gareeb: The boastful claims of lifting 25 crore people out of poverty fall flat when the government in the same breath asserts that 80 crore people are being provided free food grains. 

Yuva: Data from the Centre for Monitoring Indian Economy shows that the unemployment rate in the age group 20-24 years was 44.5 per cent in the October-December 2023 quarter. For the age-group 25-29 years, it was at a 14-month high of 14.33 per cent. The budget continues with mirages of youth development with a Rs 1 lakh crore corpus that will harness the power of youth and technology without laying out a definitive plan.

Annadata: The government never met its promise of doubling farmers’ income by 2022. The NSO survey shows that farmers are earning Rs 27 per day from cultivation. Doubling income would have required continuous double-digit agricultural growth. However, the growth clocked in the past years has been 2.8 per cent. The distress has cost lives; between 2014 and 2022, an average of 30 farmers died by suicide every day. 

Naari: While the government enacted the Women’s Reservation Bill, its implementation has been deferred indefinitely by making the provision applicable only after the census and delimitation are conducted. Women’s safety remains a mirage, with an FIR filed for a crime against women every 51 minutes. Similarly, women’s participation in the workforce remains a distant dream without job creation in the larger economy.

While the “four castes” form the pillars of the budget, the remaining key announcements only seem to continue grand schemes without concrete details and are far from ground realities. 

The government has done well to acknowledge the growing stress faced by the middle class. Salaried employment has rebounded since the precipitous fall during the pandemic but is yet to touch the 2018 levels. Food and fuel inflation, coupled with a steep rise in housing rent, education and healthcare costs have depleted household savings. A concrete relief to the middle class would have been tax concessions to boost demand in the larger economy.

Stagnant middle-class income is reflected in the industry sales numbers. In FY2023, the sale of two-wheelers was less than the units sold in FY2015. Entry-level small car sales have fallen 57 per cent from the peak in 2016-17. Smartphone shipments were down 20 per cent earlier this year. Apparel sales are down by 10-12 per cent. Clearly, something is not right if the middle class has scaled back discretionary consumption to such an extent. 

A developed India will mean high-quality public services like education and healthcare. While referring to the youth, the Finance Minister mentioned the National Education Policy (NEP). NEP 2020 recommends that investment in education should be 6 per cent of the GDP. However, expenditure on education has been less than 3 per cent of the GDP over the last decade. This fiscal, the increase in expenditure is barely sufficient to cover the inflation cost. The healthcare budget has been increased by a mere 1.4 per cent. The health infrastructure mission’s allocation has been reduced from Rs 4,200 crore to Rs 4,100 crore. 

The Finance Minister redefined GDP as governance, development, and performance. People will ask who this is GDP for. Some sections have reaped handsome economic rewards over the last decade. Billionaire wealth has grown exponentially and stock markets are soaring each year. An analysis of RBI’s consumer confidence survey shows that people with high incomes feel an improvement in the general economic situation whereas the middle- and low-income respondents are despondent about the prospects.

Last year, the government budgeted Rs 60,000 crore for NREGS. The distress in rural India made them revise the allocation upwards by 45 per cent over the year. In the last 10 months, 5.6 crore households have demanded work under the scheme. Increasing demand for work under NREGS (where wages are often lower than the sanctioned minimum wage) sheds light on the extent of the crisis in rural India. Another feature of the last 10 years has been declining real rural wages.

The Finance Minister had an opportunity to lay out a credible vision for inclusive growth and large-scale job creation. But in choosing to continue with policies that have led to slow and inequitable growth and an unprecedented job crisis, the reality is that developed India is far away.

(Rajeev Gowda is Vice-Chairman, Karnataka Policy and Planning Commission, and heads the Congress party’s Research Department; Akash Satyawali is a public policy professional and National Coordinator, Congress Research Department)