We always debate the Union Budget but how the announcements made in the budget are going to be implemented is hardly taken care of. Apart from some worthy announcements, the Budget 2022-23 has failed to make impressive headlines and experts have shared mixed reaction on the Budget.
The simplifications of the announcement made are discussed to find out the challenges on the ground. Still there are a plenty of questions that require reasonable explanation about the feasibility of the budget, keeping in mind the challenges we are facing right now.
Has the budget taken note of the measures required after demonetisation and implementation of GST and the pandemic? Has the budget taken care of internal and external challenges? Will the present economic indicators match with the aspiration of the budgetary allocation? How is this budget going to impact our economy and well-being of the people in short and long terms? Is the content of the budget in line with the mood of the nation? Here experts from the various fields express their views on the Union Budget:
According to Dr Amirullah Khan, development economist and Ex-advisor to Bill and Melinda Gates Foundation, Nirmala Sitharaman presented this year’s budget where the Government will spend a total of 40 lakh crores rupees. It will earn 23 lakh crores, which means that the deficit will be nearly 17 lakh crores. The biggest expenditure will be on interest payments at 9.4 lakh crores, which means that about 24 per cent of total expenditure will go towards servicing borrowings.
In a curious follow-up to its own Economic survey which advocated a reduction in the fiscal deficit and consequent borrowings, the budget surprisingly opted for a higher deficit. It has increased the fiscal deficit to 6.9% of the GDP and even next year pegs it at a dangerous 6.4% of the GDP. Such high levels of fiscal deficits impact the economy in several ways and adversely so. A high fiscal deficit often results in a price rise. It also tends to drive away foreign investment, especially if the deficit is covered by the government printing more money. A high fiscal deficit also results in high interest rates, making the cost of capital go up and thus reduce consumption.
Each budget that comes has a certain policy direction, sometimes a good one and often a big mistake. But this budget does not provide the policy direction that is expected of a budget that seeks to catalyse recovery in an Economy ravaged by Demonetisation, GST and COVID over the last six years. It promises high growth but shows no pathway to the same.
There is some emphasis on capital expenditure when the amount to be spent on building infrastructure is brought up from 5.5 lakh crores to 7.5 lakh crores. Here is where all the money that has been cut from other schemes has been allocated. We see significant cuts in the MNREGA and in the Mid-Day meal schemes. Health and Education, the two main sectors impacted the most by the pandemic, have been ignored with nothing substantial done to improve the situation. India continues to provide very poor quality education and denies access to modern healthcare to a majority of its population.
The Government also seems to be banking on this capital expenditure to provide jobs to the millions of youth waiting to get employed and the millions who were rather jobless over the last five years. However, the Government is not looking at solving the supply side problems that the Indian economy faces. There is no attempt at any reform, and this must be a fall-out of the failure to push through the farm law reform. Instead of solving the supply side problems that could have resulted in higher capacity creation and utilisation, the Government is continuing to focus on the demand side issues. As a result, unemployment in the country will not go away quickly.
There are the usual and familiar noises made on several other fronts. Some funds have been allocated to help MSMEs. Farmers have been promised drones. Schools will get Television sets and India will get a new Digital University. The stress on technology as a panacea to all problems continues with the announcement of a legal status to cryptocurrency and the launch of a digital currency. The signal being sent out is that of a technology friendly government that has replaced the old printed budget by an electronic version that is read out from an iPad.
A remarkable feature of the Budget is that it has completely divorced the economics from the politics, something that most of us have been arguing for. It was expected, given the high stakes elections in UP, that the Budget would distribute largesse to the India’s largest state and give out new railway lines, new Public Sector Universities and special schemes for UP. Surprisingly, there is nothing of this kind in the budget. While this is a welcome move and suggests a new direction to economic policy, the reason for doing so is very suspect.
It seems to be the case that the Government does not believe that good economics makes for good politics. Its Hindutva ideology does not depend on economic progress. In a very strange way, it is economic distress that actually works well for the ruling party. As the economy spirals downwards leading to a decline in growth and in jobs, it creates anxieties and stress. In such scenario, people look for alternatives like they did in the 20012-2014 period and voted for Achche Din. This time around faced with anxiety, they are turning to religion, temples and statues. The right wing religious agenda seeks to harness these insecurities by shifting attention from the future to the past. The promise of correcting perceived and real historical wrongs is far more powerful in such times than any vision of a better future.
Prof. Surajit Sinha, Professor of Economics, Department of Humanities and Social Sciences, IIT Kanpur shared his views by saying: Some articles have termed this budget as “capital budget”. Because it has a great deal of emphasis on capital expenditure on infra projects. Critics point out that the effects on aggregate demand will only come with a lag effect on investment and not consumption which is the need of the hour. But that cannot be entirely true because infra spending will generate income for some who will spend on consumption now beside creating profits for the infra companies which may however take time to materialise into capital investment.
There is no doubt that demand has to be stimulated to get the spiral of consumption and investment to restart. However, this budget has not opted for cash transfer to the unemployeds and underemployeds through welfare programmes to increase first consumption demand and then investment. Instead it has a long term view of the economy where infra spending will build the modern skeleton of the economy which will pave the way to increases in future consumption and investment. The debate therefore is essentially between short term demand stimulation via employment-income generation in rural and urban economies, versus long term vision of a modern economy. The answer always lies in the trade off between helping the unskilled and poor in the short run versus a path to a society with modern amenities where the principal beneficiaries are skilled and semi-skilled industrial labour.
Since resources are limited, I hope the Government has weighed each objective against the other before allocating resources under different heads. One warning has to be repeated for government’s notice is that GDP growth alone does not ensure income equality and welfare of the masses. There are ample studies that point out that while India may be slowly transforming into a modern economy, income inequality is sharply increasing at the same time. If this continues, similar to our present black-white economy we shall also have a deeply entrenched opulence-starvation combined society. Wealth never trickles down that much to benefit the majority of the people!
On Budget for Education, Prof M. Aslam, an Educationist and Former Vice Chancellor, IGNOU, who also served as Director, National Centre for Innovations in Distance Education (NCIDE) said: The budget- 2022 has allocated Rs 1,04,278 crores to education. This 11.86% increase from the previous year allocation may be a welcome step but can it provide us with a robust education system which can facilitate fullest possible development of each learner including moral, intellectual and social. I am afraid that considerable shift to virtual or online education models, and to ensure access to better technology and improved e-Learning infrastructure as envisaged in the budget may not allow us to achieve basic purpose of education i.e. integral development of a person. I personally feel that it will be counterproductive in the long run both for the students and society at large.
Unfortunately on the one hand we have no conceptual clarity about the difference between on-line, distance learning and E-learning. On the other hand we are making students grow and learn in a virtual world which leads to social disconnect and causes many psychological disorders including depression and mental illness. We are also saying “good bye” to reading and writing habits.
I strongly suggest that during the process of implementation, we may give a serious thought to rather switch over to a Multi-mode teaching and learning model as an interim arrangement only and leave a scope for returning to classroom teaching as soon as possible. The digitalisation can best serve its purpose in supplementing and reinforcing classroom teaching. It can also be effective in higher education to provide additional qualifications.
On health Budget, Dr. Wasim Ghori, Brand Ambassador – DiaBeaters, India said: The Government has announced rolling out an open platform for the National Health Digital Ecosystem with a focus on Mental Health. These are steps in the right direction showing the Government’s commitment to creating a holistic health environment thus, nurturing good health for all. The pandemic has had a visibly damaging impact on the mental well-being of people.
Furthermore, we were hoping that the Finance Minister would also address Non-communicable disease burden, care and management among the population of the country with a focus on genome mapping in reducing the risk of lifestyle diseases. Public-Private Partnerships for Genome Mapping projects promoted by the government would have made Indians more aware about their physical makeup, thus helping them in making informed lifestyle choices eventually resulting in the reduction of future medical bills and physical distress. These would have been important steps for guiding policies and priorities. Unfortunately, we haven’t had any exciting news from the Budget 2022 which we were looking forward to.