The Union Budget 2023-2024 : Reading the fine print | P. S. Jayaramu

by P. S. Jayaramu

February 2, 2023

Finance Minister Ms. Nirmala Sitharaman presented her fifth budget in succession, her last budget before the Modi Government goes to polls in early 2024. Going by the priority and higher allocations made to the Prime Minister’s programmes, one gets the impression that it is more of a Prime minister’s budget, probably fine-tuned by the PMO, if not totally drafted by it ! The finance minister made repeated references during the course of her speech to the Prime Minister and his programmes, describing her budget as setting the vision for the ‘Amrit Kaal’. Ms. Sitharaman identified seven priorities, calling them ‘saptarishis’, and included in them inclusive development, sabka sath sabka visas, reaching the last mile, infrastructure and investment, unleashing the potential for green growth, youth power and finally boost to the financial sector. Laudable priority areas indeed, though the minister did not say anything about meeting the challenges of unemployment and inflation in her budget speech, both of which are severely affecting the common man, making the ‘Amrit Kaal’ a distant dream.

However, during the post-budget press conference when pressed for her response to the twin problems of job creation and inflation, the minister responded by saying that the job creation would happen as a result of the boost to infrastructure programmes, though it is not clear what would-be the government’s step to create white collar and associated jobs. It remains to be seen if the promise of recruiting 38000 teachers under the ‘Ekalavya’ model of schools would be materialised fully during the financial year 2023-24. As for inflation, Ms. Sitharaman took pride in announcing that both the wholesale and retail inflation have come down. But, the fact remains that the decline in inflation has not resulted in fall in the price of petrol, diesel, food grains, vegetables etc, to benefit the poor and the middle class. One does not know if the cut in excise duty on petroleum products would be passed on to the citizens after the budget comes into effect in April.

My objective is to examine the budget allocations in certain key areas in the light of the allocations and revised estimates made during the financial year 2022-23 as that alone will provide a clear picture about the extent of real allocations—increase or decrease as the case may be.

Going by the description of core areas identified in the budget, for the Mahatma Gandhi National Rural Employment Guarantee Programme, the budget allocation during 2022-23 was 73000 crores, which was raised to 89400 crores as part of the revised estimates which was good. But, in the budget for 2023-24, the allocation has come down to 60000 crore, one of the lowest for the MGNREGA scheme in recent years. This is really condemnable given the fact that the rural employment scheme stood at only 6.5 per cent on 31st January. No wonder, the NREGA chief Nikhil Dey has come down heavily on the reduction in the budgetary allocation. The umbrella programme for the development of minorities which stood at 1810 crore during 2022-23 has dropped to 610 crores signalling that this government, driven by its Hindutva ideology, does not care for the minorities. Happily, the allocation for Scheduled Castes and Tribes and other vulnerable sections has gone up. One of the redeeming features of this budget is the allocation of 4000 crores for tribal development, probably with an eye on appeasing the SC, ST voters in the poll-bound states in the year.

Under the Ayushmaan Bharat scheme, the Pradhan Mantri Jan Arogya Yojana (PMJAY), has seen a good hike moving from 6457 crores in 2022-23 to 7200 crores in the budget for 2023-24. The allocation for the Pradhan Mantri Awas Yojana ( PMAY) has also seen a drastic hike from the 2022-23 figure of 48000 crores to 79590 crores, though the revised estimates for 2022-23 itself had pegged it at 77130 crores. The allocation for PM Gram Sadak yojana has remained the same in this budget at 19000 crores. In keeping with the digital requirements the computerization of Primary Agricultural Credit Societies has gone up from 350 crores to 968 crores in this budget. Likewise, the allocation for Swatch Bharat Mission too has been more than doubled from 2300 crores to 5000 crores.

But, it is sad to notice that the allocation for Environment, Forestry and Wildlife has come down from the 2022-23 figure of 930 crores to 759 crores, which is not in consonance with the government’s proclaimed concerns. Likewise, the allocation for National Health Mission has seen a decline of about 500 crores; the National Livelihood Mission too has seen a reduction of about 150 crores. The allocation for PM Kisan Samman Nidhi ( PM Kisan) has also come down from 68000 crores to 60000 crores, contrary to the government pronouncements about it’s pro-farmer approach and policy. The figures for National Education Mission too have been reduced from the previous 39553 crores to 38953 crores, though the minister has announced that Ekalavya model residential schools are being set up for 3.5 lakh tribal children and has made an allocation of 5943 crores for the programme.

The MSME sector which suffered heavily in the wake of the Covid-19 pandemic is yet to recover. The budget talks of 9 lakh crores credit guarantees to the sector. In addition to credit guarantees, the sector needs financial support as it battles rising raw material costs, hike in power tariff, heavy taxation and inadequate to poor basic infrastructure.

As regards education which is dear to my heart, the overall allocation in the budget sees an increase of 13 per cent. But, compared to the revised estimates of the 2022-23 budget, the increase is about 10000 crores, standing presently at 1, 12, 899 crores. The money has to be spent on primary education, higher education, digitisation of libraries etc. Certainly, the hike is not sufficient if we keep in mind the need for the financial support needed to be given for the improvement of the physical infrastructure of public educational institutions and augmenting teaching and research in higher education to meet global standards. The much talked about 6 per cent of the GDP to be spent in education remains a distant dream. Private educational institutions will prosper heightening the inequality in access to education for rural and urban poor students, making inclusive education a chimaera. Funding for R&D projects of the Bhabha Atomic Research Centre, nuclear fuel fabrication and Kalpakam projevts have sadly seen a reduction in allocation. That is not a healthy sign indeed.

In so far defence is concerned, the ministry sees an increase of 13 per cent. Though the ministry gets an allocation of 5.94 lakh crores, bulk of it would go to the payment of salaries and pensions, leaving only 1.62 lakh crores for defence modernisation. One wonders whether the mounting Chinese and other challenges can be adequately met by our defence forces with this kind of allocation

One of the salient features of the budget is the 33 per cent hike in capital expenditure, putting it at 10 lakh crores. While some analysts are critical of such increased spending by the government, this writer feels that such an increase is necessary as the expected private as well as foreign investment are not coming through. Infrastructure development has received a big boost, with railways getting 2.7 lakh crores. Road transport and the development of airports are necessary to raise the national capability and image in terms of overall development.

In conclusion, a few observations are in order. Firstly, it can be said that though the 2023-24 budget has been crafted and presented in the overall atmosphere of a looming recession in the West and declining GDP growth domestically. Secondly, the finance minister has managed to peg the fiscal deficit at 5.9 per cent and intends to bring it down to 4.5 percent by 2025. Thirdly, the budget has given priority treatment to the Prime Minister’s programmes. Fourthly, not much has been done to cater to the requirements of the States’ financial requirements, though they have been allowed for one more year to borrow interest-free loans. Finally, it remains to be seen how many of the allocations made in the budget will remain the same or see a decline when revised estimates are prepared.

(Author: Dr. P. S. Jayaramu is former Professor of Political Science, Bangalore University and former Senior Fellow, ICSSR, New Delhi)