In the context of the economic realities of high levels of unemployment, high food inflation rate, unprecedented widening of inequalities and the slowing down of private investment, the 2024 union government’s budget should have focused on the expansion of economic activities. Instead, its proposals are contractionary and regressive. This will only impose further miseries on the people and depress the levels of investment and employment generation states a strong statement from the Polit Bureau of the CPI (M).
The budget figures show that the revenue earnings of the government increased by 14.5 per cent while the expenditures grew only by 5.94 per cent. Instead of using these revenues for expanding economic activity, it has been used to reduce the fiscal deficit, to appease International Finance Capital, from 5.8 per cent to 4.9 per cent of the GDP.
The GDP calculations projected in the budget are yet another exercise in “data fudging” says the statement. Nominal GDP growth is projected at 10.5 per cent. Real GDP projected to grow 6.5 to 7 per cent is calculated by deflating the nominal growth by ‘core’ inflation rate of 3 per cent which excludes the high food inflation rate of 9.4 per cent, thus exaggerating real GDP growth.
Squeezing government expenditure further, subsides have been substantially cut. Fertilizer subsidy is cut by Rs. 24894 cores and food subsidy by Rs. 7082 crores. Expenditures on education, health and rural development as a percentage of GDP remain more or less unchanged. MGNREGS continues to be neglected further. Budgetary allocation is Rs.86,000 crores which was less than what was spent in FY ’23. However, Rs.41,500 crores are already spent in the first four months of this Financial Year, leaving a mere Rs 44,500 crores for the remaining eight months. Clearly, this will be grossly inadequate to tackle the deep unemployment crisis in rural India.
In the name of addressing unemployment, the budget resorts to gimmickry. The
new scheme introduced as the Employment Linked Incentive offers a one-month
wage to new entrants in the formal sector earning less than Rs. 1 lakh. Eligible workers will receive a maximum of Rs. 5,000 in three monthly instalments. However, employers receive a benefit of Rs. 72,000 for each new employee hired with a monthly salary of up to Rs.1 lakh in 24 monthly instalments, for every additional job created in two years. This is yet another avenue of subsidising corporates in the name of generating new employment. Such gimmickry cannot generate employment. The huge profits made by corporate sector in the past have not resulted in investments in machinery and production due to persisting lack of demand in the economy which is the result of shrinking purchasing power among the people.
Budget 2024-2025 also highlights schemes to enhance skills among India’s youth. This
again is not going to solve the problem of high unemployment. During the period between 2016 and 2022 only 18 per cent of youth who attained training through skill promotion schemes got a placement. Once again, unless the economy expands job opportunities cannot grow.
Despite all talks of ‘cooperative federalism’, the state governments face a raw deal, apart from Andhra Pradesh and Bihar, under political compulsions. The survival of this ND Alliance government depends on the support of allies, particularly the Telugu Desam Party and Janata Dal (United).
However, the Finance Commission grants (apart from the tax devolution) to states has been reduced from Rs. 172760 crores in 2022-23 to Rs 140429 crores in 2023-24 and this budget reduced it further to Rs 132378 crores.
Overall, this budget is aimed at further enriching the rich and impoverishing the poor. It refused to consider any proposal of wealth or inheritance tax on the super-rich of India, neither any relief on indirect tax burden on people.
The Polit Bureau of the CPI(M) calls upon all Party units to protest against the failure of the budget to address the pressing issues of the people and the economy.