The problem really is that there is no open and free discussion on any policy; there are no objective evaluations of these policies and programmes by experts
The Indian economy today is facing serious problems from the international and domestic fronts. That is the real situation juxtaposed against the vision of Vikasit Bharat. Also, the dream of Vikasit Bharat 2047 is less than 25 years away. One therefore expected another 1991 moment in this budget. However, the budget has disappointed badly.
While this disappointment in the budget is on many fronts, there are some high points. One high point is the relaxation in the income tax rates – no tax up to Rs 12 lakh personal income. This will definitely increase the demand in the economy and give a push to economic growth. About Rs 1 lakh crore will be added to the economy through this tax relaxation and that will have a good multiplier impact. However, the impact will be limited and within our Rs 330 lakh crore economy. Around 3.5 crore income taxpayers (17.5 crore population) cannot make radical changes in the demand.
Another positive point of the budget is its focus on agriculture, as it is “the key driver of the economy”. Programmes like the national mission on high-yielding seeds, Dhan-Dhanya Krishi Yojana, promotion to pulses and cotton mission etc are proposed in the budget. However, the funds allotted to agriculture have increased only marginally. The impact of these new programmes will be only marginal if at all.
Again, the focus on “investing on people” in the budget is also desirable. However, the funds allotted to health and education have not shown any significant increase. Though several schemes have been presented, the matching funds are not made available. In the case of education, Rs 1,25,638 crore was allotted in the 2024-2025 budget and Rs 1,28,650 crore for the year 2025-2026 – this shows a decline in real terms. Similarly, the increase in the budget for health to Rs 98,311 crore also implies only a marginal increase in real terms. Though covering gig workers under insurance and increasing seats in medical education are good steps in the right direction, without additional funds, these programmes may not be effective.
It also must be added that the government’s focus on insurance has resulted in the neglect of public health services. What people want are good public health services, and not just insurance, which is accessible only when there is hospitalisation. As regards primary health services, the budget allocation to primary health the National Health Mission has declined in real terms. It is argued that state governments are expected to spend more on these two sectors; however, the reality is that most states are not spending enough on these sectors. Without strong human capital, economic growth on one hand and the wellbeing of people on the other will suffer badly.
A careful scrutiny of the budget shows that the funds allotted to tribal development, social welfare and rural development, including schemes like MGNREGA, have declined in nominal or real terms. Also, funds allotted to the PM Poshan Yojana, Swachchata Mission, PM Sadak Yojana, fisheries, Jal Jivan Mission, PM Urban Awas Yojana and many other such schemes and programmes, which concern the upliftment of poorer and weaker segments of our society, have declined in nominal or real terms. In retrospect, the funds allotted to these programmes also appear to be highly underspent. This clearly reveals the actual lack of concern of the government for these pro-poor programmes.
The government has not been very successful in the field of providing productive employment. However, it took a positive step in the last budget by announcing apprenticeship programmes along with internship. But the government could spend only Rs 300 crore out of Rs 2000 crore allotted to this scheme last year. This perhaps reveals the government’s actual low commitment to this field. This year again, the government has decided to promote the scheme. Let us hope that they are more committed to it this year.
Given the financial constraints (arising from huge financial incentives to the corporate sector, writing off their debts and frequently their tax evasion) on the one hand and pressure to reduce the fiscal deficit on the other hand, the budget has announced a fiscal ratio of 4.4 % this year. It is clear that the government will have to change radically to expand fiscal space in the economy. Or the financial constraints will limit public expenditure on social sectors including employment and on development.
Overall, India needs 7.0-8.0 % growth for 25 years continuously to become a developed economy. This does not seem to be plausible or possible at present. It appears that the government is neither able to define the term Vikasit Bharat clearly and in detail nor has it been able to design the pathway to Vikasit Bharat. For India to move from a per capita income of $2,697 today to a per capita income of $23,380 (ILO’s benchmark) requires a different growth path. More of the same approach will not work.
The Economic Survey has highlighted trust deficit as a major obstacle to our development, but the budget has nothing to say about how this deficit would be removed. The government wants to ensure that “no one should be left behind” but there is nothing in the budget to assure us of this. The rising inequalities in the country have been blatantly ignored.
The Billion Press (Dr Indira Hirway is a Professor of Economics at the Centre For Development Alternatives, Ahmedabad, and Associate, Levy Economics Institute of Bard College, New York.)
