Interim Budget 2024-2025: Focus on Individual Beneficiaries | Sher Singh Sangwan

The Central Interim Budget 2024-25 is being analyzed based on the Budget Speech (BS) of the Finance Minister (FM) and major item-wise & scheme-wise allocations extracted from the Budget at Glance. Accordingly, it is analyzed under three sections.

I. Budget Speech

The BS is like an essay on the glorification of the Government’s performance since 2014-15. to quote FM, "The Indian economy has witnessed a profound positive transformation in the last ten years. The people of India are looking ahead to the future with hope and optimism.” It repeats the usual political slogans, “Sabka Saath, Sabka Vikas’ and ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas’ which were used by BJP during 2014-2019 and 2019-24, respectively. The BS revolves around the development of four castes of PM i.e. the poor, youth, women and the Annadata. Part I of the BS may be summarised as as under.

To help the poor; the schemes like PM Jan-Dhan Yojna, the approach of Direct Benefit Transfer, credit to vendors, artisans and Mudra loans are mentioned by the FM. She says with ‘Sabka ka Saath’; 25 crore people were freed from multi-dimensional poverty in the last 10 years. Then, why a free ration to 80 crore families is provided is not explained. It means these schemes are just political campaigns with little allocation from the budgets. MGNREGA was the scheme where about Rs one lakh crore is the annual allocation but is not highlighted as it was started by the Congress. To keep hopes alive, FM says Houses to the 5 crore families will be provided in the next 5 years and one crore households will be enabled to obtain up to 300 units of free electricity per month by solarisation of their rooftops.

Regarding Empowering youth; the implementation of the National Education Policy 2020, the Skill India Mission, Mudra loans and an increase in the number of IITs & IIMs and the medals won at international levels are mentioned. However, the number of jobs provided or created does not find a place in the BS. Empowerment of women is mentioned through Mudra loans, Self-Help Groups, making ‘Tripple-Talaq’-illegal and names of women in 70 % of PM Awaas. The reservation of one-third of seats for women in the Lok Sabha and State Assemblies is mentioned as the future hope without any allocation from the budget.

Farmers have been flattered as the Annadatas; giving them direct financial assistance under the PM-Kisan Samman Yojana of Rs6000 per annum since 2019, PM Fasal Bima Yojana, e-NAM, and announcing higher MSPs after 2018 without indicating the quantities procured. A PM Kisan Sampada Yojana is also mentioned but it is not realised by farmers as the share of NFS income of AHHs decreased after 2013. The government is harping on the Nano-use of urea and DAP and Farmers have been facing the pinch of fertilizers’ crunch during recent years. The Atamnirbhart Abhiyan for oil seeds is a good announcement to be supported by research for high-yielding varieties, procurement, value addition, and crop insurance. Let us hope farmers will get at least MSP this year limiting imports and increasing procurement by GOI are sine qua non for its success.

II. Allocation under major Heads

Sub-head-wise allocation is taken from the Budget at Glance of 2024-25 budgets and 2016-17 budgets for actuals of 2014-15. The bifurcation was different in these two years and hence it has tried to club subheads as per broad heads given in 2014-15. Plan and non-plan in 2014-15 were merged to compare. The railway budget for 2014-15 was also clubbed with transport. The allocations are presented in Table -1. The size of budget estimates in 2025-25 is Rs.47.66 crore which is 3.54 times of 2014-15 actuals at current prices and 2.59 times at constant price. The compound growth rate works out to be around 5 % over 10 years which is not a miraculous rate.

In the budget estimates (BE) of 2024-25 are compared with the percentage allocation in 2014-15 in brackets. The BEs in 2024-25 have reduced allocation in pensions 5.03 %( 6.96%), Defence 9.54 % (16.26%), Subsidies 8 %( 19.20%), Home Affairs 2.92% (3.55%), interest payment 24.98 %( 29.92%). Most of these allocations benefit farmers and low-paid employees of the forces. The reduction in interest payment may have happened due to a regime of low interest during the last 10 years.

Source: Budget at Glance 2024-25 and 2016-17 for actual of 2014-15 3.54 and 2.59

The present government has allocated more funds to economic services 11.90 %( 1.98%) for agricultural development Commerce & Industry, energy and science). Transports (roads, ports, railways) have also been allotted 11.42 %(10.72) and it has been continuously higher in the last 10 years to strengthen infrastructure. Social services including education, health, communications, and social support have been allocated 8.13 % against 2.38% in 2014-15. However, more than three times allocation to Finance-Mininstry in BE of 2024-25 is not explained in the budget. Allocations to States and Union Territories are not comparable as GST has been implemented since July 2017 only.

On the whole, allocations are more towards economic growth and less for welfare schemes. Pensions and Subsidies on fertilisers and petroleum especially gas are reduced increasing the burden on marginalised sections. It has also resulted in unemployment and inequalities in India as per the Oxfam International report. Farmers have been feeling the pinch of a crunch in fertiliser supply in recent years.

II. Allocation among major Schemes

As per the budget at Glance, the Central Government is implementing its agenda through 170 core and state-sponsored schemes. The outlay on major schemes is shown in Table 2.

Table - 2: Outlay on Major Schemes

Source: Budgets at Glance 2024-25 and 2015-16

MGNREGA started in the Congress regime remains the biggest wage-employment programme for the rural poor despite initial criticism and restriction by the present government. However, to compensate for it, a free ration under Garib Kalyan Yojana was started during Covid-2019. Now, it has been extended for the next 5 years on the eve of the Parliament election in 2024 with the highest allocation of 2.05 lakh crore in the budget of 2024-25. Studies will through light on the comparative advantage of free and employment schemes, though a Dalit-oriented Party BSP has already termed it a scheme to enslave the poor.

The allocation to general schemes like interest subvention, fertiliser subsidy, gramin-sarak, Anganwaries/Ashaa workers; mid-day meals have been restricted. Whereas, the schemes with the prefix of PM like Rural Awas, free ration, drinking water, Ayush, Kisan-samman, LPG connections/Ujwala), rooftop solar-power, etc have been given higher allocations. Most of these schemes benefit individuals who are added to the list of obliged families by the Government.

The FM has attempted to adhere to fiscal discipline by efficiency in tax collection without any new taxes or increases in existing ones. The revised fiscal deficit is to be 5.8 per cent of GDP in 2023-24 and will be restricted to 5.1 % in 2024-25, though it was just 4.1 % in 2014-15.

(Author: Sher Singh Sangwan, Former Professor holding the SBI Chair and
General Manager NABARD)