Ritualistically, the Finance Minister (FM) of the BJP government has presented Budget of 2023-24 financial year amidst continuous bench-thumping by the ruling party MPs as if there was an avalanche of much-touted amrit vani (ambrosial stream) was pouring out from the rostrum. But cunningly, the FM has not exposed the figures in his written speech but hid them in the annexures so that all anti-people steps remain out of the public domain at the outset. The speech was stuffed with a slew of economic jargons, customary promises of doing all big things and repeated praise of PM Modi as if he is a demi-god having appeared in the Indian political scene to usher in economic salvage of the people at large. All promises are now put off for the next 25 years, as the president’s address to the joint parliament session suggested. One must appreciate the uncanny shrewdness and cunningness with which the speech was drafted. But once one got to know what was emblemed in the annexures, all tricks of camouflaging an out and out anti-people design came to the fore. For convenience of the readers, brief notes on the budget proposals for different sectors have been given separately. Here, we would only deal with the essential aspects of the budget, fudging of data, the principal anomalies as well as suppressions.
Economic growth and related issues
In bourgeois economy, economic growth is characterized by GDP rise, per capita income, progress of industrial development and surge in stock market indices. Price rise, employment growth, affordable providence of universal education and healthcare, agricultural performance and prospects are all relegated to the back. As per the latest Economic Survey, tabled before the day of the budget, the Indian economy is set to attain a real GDP growth of 7% in 2022-23, with the expectation of fall of both the retail and wholesale inflation rates below 6% in the months ahead. The Union Budget presented in this backdrop assumes a nominal GDP growth of 10.5% in 2023-24, which implies a projected inflation rate of just 4%, given the economic survey’s baseline real GDP growth projection of 6.5%. Earlier, it was claimed by the government that rate of growth including inflation would be 15.4%. In that case, then GDP growth would have been 10%. But government says it is only 7%. No explanation has been provided. Though Economic Survey projected a 7% GDP growth, RBI in its latest monetary policy announcement, pegged it at 6.5%. Which one is correct? Economic Survey stated the rate of retail price rise to be 6.5%. But the budget says it is 6.8%. Again, it is an enigma. Who is to be believed? Moreover, India’s ‘‘world-beating growth’’ masks rising inequality with 21 wealthiest billionaires possessing more wealth than 70 crore Indians, according to Oxfam India.
Though there has been celebration over budget deficit having come down as a ratio to GDP, in net terms, it has increased to Rs. 16, 61,196 crore. At Rs 45,03,097 crore, the total expenditures will rise by only 7% over the revised expenditures in the current year. This is less than the projected 10.5% growth in nominal GDP.
Capital Formation and private investment
According to Economic Survey, India’s economic growth in the financial year (FY) 22-23 has been principally led by capital formation and private consumption they have helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund. First of all, capital formation is the net accumulation of capital goods, such as equipment, tools, transportation assets, and electricity, during an accounting period for a particular country. It is also defined as that part of country’s current output and imports which is not consumed or exported during the accounting period but is set aside as an addition to its stock of capital goods. Notably, capital formation does not mean increase in money capital, but it actually refers to increase in physical capital. Gross fixed capital formation consists of resident producers’ investments, deducting disposals, in fixed assets during a given period. The three stages of capital formation are (i) Creation of Savings, (ii) Effective Mobilization of Savings, and (iii) Investment of Savings. Annual growth in real private final consumption expenditure (PFCE) and real gross fixed capital formation (GFCF) for 2022-23 are expected at 9.4 per cent and 9.9 per cent, respectively. But, we know, saving rate in India is very poor as nearly 60% people do not have even a subsistence level earning, let alone savings. If one does not earn more than what is necessary to eke out a bare living, how can one have fixed asset? We have already stated above that 7.5 lakh industries have been closed down. So, the land, plant and machinery of those closed factories have been unproductive. Secondly, private equity investments in India fell by 42 per cent across sectors in 2022-23. It has been seen that by repeatedly lowering interest rates, there was hardly any offtake of bank loans for productive investment. Private investment would flow if there is a demand in the market. With income of the people declining progressively, the market is squeezing with every passing day. So, the private houses who invest only to maximize profit would stay out. Now with increase of interest rate, bank loans proving more costly for the industries and their abstention from investment sector, according to bourgeois economics, would be more, what is called in technical terms, ‘crowding out’. Then on what basis, the government is optimistic about rise in private investment?
Thrust on capital expenditure
Nevertheless, Government says that the optimistic growth forecasts stem from a number of positives like the rebound of private consumption given a boost to production activity, higher capital expenditure (Capex), near-universal vaccination coverage enabling people to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return of migrant workers to cities to work in construction sites. Let us ask, there was a capex thrust in the last two budgets as a stated strategic package aimed at ‘crowding-in’ private investment. has that been of any effect?
It has to be admitted that No. Yet, this year, allocation towards capex is Rs10 lakh crores. The argument that capital expenditure will generate greater employment which in turn creates greater purchasing power and greater consumption giving a fillip to more production proved to be totally false given the fact that unemployment increased in the corresponding period according to governments own statistics. Increase in capital expenditure will not by itself reflect in increased generation of job opportunities, as time and again it has been painfully experienced by the working class of all countries. With discovery of improved technology, the capitalist owners adopt that to lower cost of production by retrenching proportionate manpower. So production whatsoever generated adds to GDP but not in job creation, rather causing job loss. This phenomenon is termed as jobless growth by the bourgeois economists. Government spending on infrastructure, though substantial, has not been even remotely able to counter the near-absence of private investment growth. Whatever hype budgets may create, the legacy of Modi’s nine years in power has been a stagnation in manufacturing, private investment and employment.
Household consumption
Another weird logic provided by the FM is that, world’s second-largest vaccination drive involving more than 200 crore doses also served to lift consumer sentiments that may prolong the rebound in consumption. Is it a logic-based assumption or a wishful thinking? According to the first advanced estimates of the GDP, private final consumption expenditure, which is a proxy for household consumption, is expected to grow 7.7% in FY23. However, analysts told Business Standard that the consumption demand is highly skewed in favour of goods and services consumed largely by households falling in the upper-income bracket. If people’s incomes at the bottom of the pyramid is stagnant, how will demand pick up? If demand doesn’t grow, why would the private sector invest? The government has been caught in this Catch-22 situation for many years. Post-Covid-19, incomes of the bottom 70% of the population suffered even more. While over 12 crores Indians have lost jobs in the two pandemic years, around 80 crore countrymen are reported to be under poverty level. Roughly, 23 crore Indians fell below the national minimum wage poverty line. And notably, the strength of India’s middle class has shrunk to 6.6 crores, down a third from a pre-pandemic estimate of 9.9 crores. According to government estimates, private final consumption expenditure (PFCE)—that is, the sum of all spending done by households and other private entities—is pegged at 57.2% of GDP in 2022-23. Last year, in 2021-22 it was 56.9% of GDP. So that’s a positive sign because people’s spending is what drives the economy. However, there is a rub. Going yet another year back, in 2020-21, PFCE was 57.3% of GDP, as per fresh revised estimates. So, private spending dipped in 2021-22 and has risen a bit in the current year, but it is still below the level reached in the first pandemic year. In this budget, subsidy on LPG given to the poor has also been reduced by 75 per cent. The revised estimate for 2022-23 has been reduced to Rs 2,257 crore from Rs 9,170 crore, which means a steep cut of Rs 6,913 crore. We do not know whether this would entail another dose of steep rise in LPG price which, in that event, would raise household expenditures further curtailing the middle and lower-middle class purchasing power.
It means that despite all the talk of recovery from the so-called pandemic induced economic slowdown, people do not have sufficient buying power in their hands to create the necessary demand in the economy which, in turn, would lead to more investment, more production, more jobs and thus an overall recovery.
Agriculture
The spending of the rural development ministry is slated to decline from Rs 288,446 crore in 2021-22 to just Rs 236,545 crore in 2023- 24. Six years back, when average income of the peasants was stated to be Rs 8,000, PM Modi boasted of doubling peasants’ income by 2022. To double that would mean a monthly income of just over Rs 16,000. Taking inflation into account, that would mean about Rs 22,000 now. The sycophant FM has remained silent on that because the actual figure is not even 1/4th of that. The FM announced that the PM-KISAN payments would increase from Rs 6,000 per farmer to Rs 8,000 per farmer in what is clearly one of the few pre-election sops—but that is not reflected in the expenditure budget, where the amount allocated is the same as the previous year i.e., Rs 60,000 crore. What is more, the FM did not dare to mention in her speech, a most regressive step which was cunningly incorporated in the annexures. Subsidy on fertilizers including urea has also been cut by Rs 50,121 crore. The government has earmarked Rs 1,75,099 crore for fertilizer subsidy in the 2023-24 Budget as against Rs 2,25,220 crore in the revised estimate of 2022-23. Cut in subsidy would raise cost of agricultural input causing further predicament for the peasants. Though the peasants who conducted a historic movement to force the government withdraw schemes to hand over the entire agriculture to the monopoly houses and multinationals, have been demanding announcement of Minimum Support Price (MSP) for crop procurement. There is no reference to that in the budget. Rather, allocation towards National Food Security Act has been lowered by 17%. Budget for Food Corporation of India has also been curtailed. These would surely impact Public Distribution System. On the other hand, it has come to light that the Crop insurers have received premium worth of Rs 29, 263 crores in 21-22 from the governments and peasants. But only Rs 14, 716 crores have been the figure of claim reimbursement. So, the insurance companies have pocketed hefty profit while many deserving peasants did not get compensation amount for crop damage. Allocations towards Fasal Bima Yojana and PM Kisan Scheme have been reduced by Rs 2000 crores and Rs 8000 crores respectively.
Moreover, in 2018, a new scheme Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM ASHA) was launched with the declared objective of helping revival the rural economy by assuring better income to farmers. With better prices across crops (mainly oilseeds and lentil), this scheme was claimed to be ensuring crop diversification and reduce the stress on soil and water. In 22-23, Rs 1 crore was granted for the scheme, and in 22-23, the allocation is only Rs1 Lakh. ‘Market Intervention scheme and Prices Support scheme’ for compensating loss of fruit and vegetable producers, allocation has been drastically cut from Rs 1500 crores to just Rs 1 lakh. (You read that right—it’s not a typo.) What mockery! Incidentally, Economic Survey has admitted that a sizeable section of rural unemployed is masqueraded as peasants.
Rising unemployment and deteriorating life conditions of people
Unemployment is stated to be the highest now in last few decades. But the Economic Survey suggested that the government is innocent of—or in denial about—the material conditions of the vast bulk of the Indian population. Great indeed! Why should the government waste time on bettering life conditions of common people who are not ‘wealth creators’ and whose growth is not synonymous with country’s growth? Government ought to think of prosperity of the few corporate tycoons accretion of wealth to whom would propel India’s growth! It is officially admitted that aggregate employment rates are at historically low levels; formal employment is coming down and job losses are hitting even the most ‘‘dynamic’’ sectors like IT; median money wages (the borderline between the highest and lowest i.e., 50:50 pay of workers in a specific position or occupation) are lower than they were two years ago. In a reply to a question in Rajya Sabha, the union minister, Personnel, said that number of vacancies in government is as high as RS 9,79, 327 including Rs 2,93,943 unfulfilled posts in the Railways. But the budget did not say if those posts are to be filled up.
The PM often harps on skill development. But his much-clamoured Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has seen allotment being cut from Rs 393.75 to Rs 235.57 crores. Is it that skill development need has been relegated to the back or the government does not have any clue to what kind of skills needs to be developed for making the job-seekers employable.
The government goes on reiterating that increase in investment breeds job. Figure of capital expenditure (spending to create stable assets like new industrial units) is highlighted as government’s initiative in this regard. But to inflate capex figure, the FM has not minced matters to include support to oil companies under ‘‘capital expenditure to fund the green transition’’! The government had been arguing that both private and public investment in infrastructure and other industrial projects have to grow hand in hand. But, record of private investment and employment in the previous nine years record did not even find a place in the footnote of budget in ‘Amrit Kaal’. Despite reduction in corporate tax rate, ‘ease of doing business’, offering a slew of other benefits and assistance including a lower interest regime hereinbefore, has the private investment in productive sectors gone up? Statistics say, No. Rather shutters have been downed in around 7.5 lakh industries throwing millions out of job. The PM’s demonetization stunt had snatched jobs of many who were receiving wage in cash. When the pandemic broke out and the PM, after completing all his agendas of gaining or retaining political power, announced sudden lockdown, over 12 crore migrant labourers lost job. People have seen how post-graduates and doctorates are applying for jobs of mortuary-assistant and bursting in spontaneous movement over denial of employment in the Railways and other sectors. Even thousands of qualified engineers are jobless while the PM has been couching for skill-development and the corporate heads lamenting for non-availability of ‘suitable’ candidates. A survey has shown that because of steep rise in prices, 60% rural households fear that their real income would dip this year.
Drastic slashing of budget for MNREGA
In this backdrop, most inhuman has been slashing the budget for MNREGA (100 days work), the critical lifelines for the rural poor, by 33%; Rs 30,000 crores in absolute terms. Only Rs 60,000 crore is the budgeted allocation. An estimate shows that minimum Rs 2.72 lakh crore is required for 100 days of work while Rs 1.24 lakh crore can only generate 40 days of work per household per year. Further presuming that a substantial part of this amount will be siphoned off due to corruption, one can imagine the real state of affairs of the people who are supposed to be benefited under the MNREGA scheme!
Food and hunger
India, as is known to all, was ranked 107 out of 121 countries among the Global Hunger Index of 2022. Other official surveys are finding horrifying nutrition indicators. Micro surveys reveal evidence of growing incidence of absolute hunger. Yet, spending on the National Food Security Act is to come down from Rs 215,000 crore estimated for 2022-23 to Rs 135,000 crore. Typically, rather than admit having reduced the food subsidy by 31% (which is indicative of lower procurement of crops by the government), the Modi government has tried to disguise it by presenting it as a grandiose news scheme, PM Garib Kalyan Anna Yojana (PMGKAY). ‘‘Continuing our commitment to ensure food and nutritional security, we are implementing, from 1st January 2023, a scheme to supply free food grain to all ‘Antyodaya’ and priority households for the next one year and the entire expenditure of about Rs. 2 lakh crore will be borne by the Central Government’’, boasted the FM. Again, there is a catch. The eligible households will now be able to get their total entitlement of 35 kg per household for free, but that was already heavily subsidized at Rs 1 per kg of coarse grain, Rs 2 per kg of wheat, and Rs 3 per kg of rice. The additional 5 kgs per person will no longer be available. This actually reduces foodgrain access for the poor since families will now have to purchase the rest of their requirement from the open market at much higher prices.
Tax revenue and borrowings
Corporate tax collection as a share of GDP fell from 3.7% of the GDP under the UPA-II to 3.3% of the GDP under the NDA-I and came down further to 2.3% of the GDP in 2020-21 following the sharp corporate tax cuts introduced in 2019. The post-pandemic recovery has led to enhanced tax collections, but corporate tax collections remained at 3.1% of the GDP in 2022-23. Revenues from personal income taxes have become almost equal to corporate tax revenues point towards a regressive taxation regime. Drastic slash in corporate tax rate in 2019 has indeed been the main reason. Notably, 32.40 % of foreign ministry budget is earmarked for aids and assistance for development of other countries. Talibani Afghanistan has been granted as high as $25 lakh (Rs 20.5 crores showing how the BJP is fighting fundamentalism and terrorism.
While the FM waxed eloquent about increasing personal income tax level marginally and that too with lots of strings attached, fact is that no tangible benefit would accrue to the hardly 3% of tax paying Indians. On the other hand, because of slash in the surcharge of very rich community who pay tax at higher rate, their tax burden is reduced from 43% to 39 %. Despite soaring profit of the corporates, no additional tax has been levied on their windfall gain. Tax revenue has been Rs 20.86 lakh crore. Yet around over Rs 17 lakh crores had to be borrowed to finance budgeted expenditures. Roughly, 34% of earning of the government are through borrowings and other debts. Incidentally, the central government has proposed to raise further loans of 15.44 lakh crores for the current fiscal year 2023-2024 which would results in total loans of more than 170 lakh crores. This means that in order to pay off these loans each and every citizen of this country will have to bear the burden of paying at least one lakh rupees in the form of taxes. 40.9% of earned in payment of interest on the borrowings. The much-trumpetted scheme to fill up major portion of deficit through disinvestment of Public Sector Units (PSUs) has proved to be a damn failure as there is no taker of those units. So, the FM only said that they would go on ‘‘allowing carry forward of losses on strategic disinvestment including that of IDBI Bank’’. Similarly, there is no reference to success or failure of so-called ‘asset monetization’—a euphemism for backdoor handing over of Government asset to private hands. So, the FM skirted this question in her budget speech.
Military Budget continues to soar
In keeping with the ongoing tradition, military budget has been raised this year also by 12.95 per cent. While it was Rs 5.25 lakh crore last year, it is Rs 5.93 lakh crore this year. The capital budget, that caters to the modernization needs of the armed forces like buying of new equipment and fire power, has seen a modest increase of 6.57 per cent by Rs 10,000 crore. India, it is pertinent to mention, accounted for 11 per cent of global arms imports in 2017-21 and continues to be one of the biggest importers despite the government limiting 68 per cent of the capital procurement to Indian firms.
Healthcare, Education and Science and Technology
For convenience of reading, budget details of three key sectors, Health, Education and Science and Technology have been given separately. It will be observed from there how allocations have been curtailed in these crucial sectors.
Cut in transfer of amounts to states
In keeping with the prescripts of economic and political centralization-a hallmark of fascist autocracy-the BJP government has reduced the allocations for transfer to the states. In 2021-22, such transfers amounted to Rs 4,60,575 crore, but they were slashed to Rs 3,67,204 crore in last year’s budget. Since the revised estimates plan for only Rs 3,07,204 crore is budgeted to be transferred in the current fiscal year. The budget provision of Rs 359, 470 crore in the coming year is still lower than the previous year’s budget estimate. With lowering of transfer amount coupled with increased responsibility thrust upon the states militate against the very federal structure of Indian Republic. Also, the fact to be taken into account is that of late, all increase in indirect taxes have been in the form of cess and hence the extra earning accumulations to central exchequer does not require to be shared with the states. Such cess and surcharges doubled in share of the total taxes from around 10% in 2011-12 to more than 20% in 2021-22 and the states’ share of tax revenues has been declining steadily, to 33.2% in 2021-22, 31.2 per cent in the revised estimates for the current year, and only 30.4% in the proposed budget.
Concluding remarks
With the passage of time, the bourgeois governments have been demonstrating more and more shrewdness in suppressing truth, manipulate figures, float manufactured data and dish out all waffles to hide what is there up their sleeves. The BJP government under PM Modi can surely claim the title of ‘‘Vishwaguru’’ (global teacher) in this regard. Every time the budget preceded by the Economic Survey are placed, it appears that the BJP government has put in place a skilled team who know how to use some lingual gymnastics to shield the reality, how to fleece people more fiercely with an angel’s face with a devil’s purpose. That is why, as we mentioned at the outset, the budget speech is so drafted as to project an angelic face while the devil is camouflaged in the annexures. As capitalism following its own laws will become more crisis-ridden, turn more reactionary and despotic, its servitors find out newer trickeries to deceive the masses by vending dreams and refraining from providing a report card of their past performance.
Those on the payroll of the ruling monopolists think that they are clever enough to take people for a ride. But, sorry gentlemen, you are mistaken! There are persons cleverer than you. They have ability to ferret out the truth from the surfeit of counterfeit statistics, promises, drum-beatings and pedagogies. More the consciousness dawns upon common oppressed people, more vociferous they would become against such deceits and deprivations of yours, the shameless servitors of decadent, moribund, utterly corrupt and despotic capitalism. They will close their ranks in right earnest and embrace the path of united, organized and prolonged struggle under genuine revolutionary leadership to take out the veneer of your murky face.
