The country is at a critical juncture ahead of today’s Union Budget, grappling with significant economic challenges. Despite being an accounting document, the Union Budget is more than just a ledger of expenditures and revenues ~ it is a powerful signal of the government’s priorities and policy direction. This year’s budget comes amid pressing issues like unemployment, inflation, and growing income inequality, which demand urgent attention. Recent data from surveys such as the Annual Survey on Unincorporated Sector Enterprises (ASUSE) and the Household Consumption Expenditure Survey (HCES) reveal a stark reality: a large portion of the Indian population continues to earn very low incomes. Economic growth over the past few years has predominantly benefited a small number of the elite, with real wages stagnating for the majority.
Despite electoral promises from the ruling Bharatiya Janata Party to uplift the poor, youth, and women, their policies have largely maintained the status quo. The informal sector, which forms the backbone of India’s economy, has been particularly hard hit by policies like demonetisation and the abrupt implementation of the Goods and Services Tax, further exacerbated by the Covid-19 pandemic. While India’s GDP is growing faster than most countries, growth in domestic private consumption remains sluggish, and household indebtedness is rising. Moreover, private investment has not picked up significantly despite various incentives. The government’s strategy has heavily relied on increasing public investment in capital expenditure, which rose from 1.6 per cent of GDP in 2014-15 to 4.3 per cent in 2023-24. The rationale is that such investments in infrastructure and other projects would create jobs and stimulate private investment.
However, these anticipated returns have yet to materialise, casting doubt on the effectiveness of this approach. Additionally, the government’s neoliberal agenda, emphasising market-based solutions and the role of “wealth creators,” has led to a regressive taxation system favouring large corporations. Concurrently, social sector spending has been cut, with significant reductions in health and education budgets, and decreased allocations for welfare schemes like the Anganwadi programme and the National Social Assistance Programme (NSAP). Reports indicate that the share of health spending in the Union budget has halved since 2014-15, while the education budget has also seen a decline. As the Finance Minister prepares to present Budget 2024, the need for a paradigm shift in policy is evident.
The recent crises, such as the failures of the National Testing Agency and desperate job seekers crowding for interviews, highlight systemic issues in employment and education that require immediate and substantial policy responses. Budget 2024 has the potential to be a turning point. While it cannot solve all economic problems, it can reflect a commitment to addressing the nation’s pressing issues. Whether the government will seize this opportunity to make bold changes or continue on its current path remains to be seen. The upcoming budget presentation will reveal if there is a genuine effort to address unemployment, inflation, and inequality, or if it will be business as usual.