The first full budget of the third term of the Modi government has left even large sections of the middle class support base of the regime highly disillusioned and angry. Even Godi Media anchors have started raising inconvenient questions before the Finance Minister. A budget coming in the wake of an election in which the economic crisis cast such a long shadow and the ruling party lost its majority could not remain completely quiet about the concerns haunting the country. Yet the budget said nothing about the most pressing issue of soaring prices, food inflation in particular, and its pretense to address the burning issue of jobs and the long-pending promise of a special package for Bihar only exposed the regime's absolute incompetence and shocking indifference to the plight of the people.
The BJP in Bihar had supported the demand for a caste census and the resolution adopted by the Bihar Assembly to expand reservation to 65% following the publication of caste census figures in the state. But ahead of the budget session of Parliament, the Patna High Court had struck down this expanded reservation. The most urgent issue concerning Bihar was therefore to adopt a resolution to transfer the Bihar reservation issue to the Ninth Schedule of the Constitution to take it outside of the ambit of judicial review. The other popular demand of Bihar which Nitish Kumar had also repeatedly raised since becoming Chief Minister of the state has been the demand for a special state status which would have entitled Bihar to a greater ratio of grants than loans. The NDA government in Delhi rejected this demand of the NDA government in Patna, offering instead a one time special package. Even on this score, the budget made a mockery of Modi's famous August 2015 promise of a 1.25 lakh crore package by announcing a ₹58,900 crore package clubbing together pending proposals of a power plant, flood-fighting measures and road construction projects.
The economic survey and the budget both appeared to focus on the issue of jobs. The survey expressed concern that half of India's unemployed were actually unemployable and hence the work force needed to be skilled and trained. The question of job creation was thus cleverly reduced to the question of skill improvement and training. Nine years ago, the Modi government had launched its much hyped Skill India mission with the goal of training over 40 crore citizens with different industry relevant skills by 2022. If in 2024 the government still laments about the unemployability of India's youth, it is in the first place a confession about the failure of the Skill India mission and the government owes an explanation about it before talking of new programmes. The economic survey also noted that the corporate sector was not creating jobs in spite of huge gains made from tax cuts. The government must therefore take the lead in job creation while holding the corporate sector accountable for its performance. The budget however refused to follow this course.
In the name of job creation, the budget once again expects a market-led solution and limits the government's role to giving incentives to the private sector to employ more people. The budget offers extra income support to first-time employees and provident fund support to employers for additional employees. There are talks of upgraded ITIs and internships for one crore youth in 500 top companies. If 500 top companies are to provide internships to one crore people over next five years, it amounts to an annual average intake of 4,000 interns per company. Soon after the Finance Minister made such loud announcements in the budget, ministry officials let out the truth - the companies will not be forced but only 'nudged' to provide internship. The impact of such nudging on India's top companies who habitually revel in evading taxes and skirting social responsibilities is not difficult to imagine.
Heavily indebted farmers and jobless youth were the major social forces behind the 2024 mandate. The budget once again betrayed both these forces. The government continues to evade the farmers' long-pending demand for legal guarantee to MSP as recommended by the Swaminathan Commission in spite of an assurance given to the farmers' movement. The question of debt relief too remains unaddressed despite continuing farmer suicides. Partial acknowledgement of some symptoms of the economic crisis means nothing without policy reorientation and course correction. There can be no economic justice for India's toiling millions without a clean break with crony capitalism.
Budget 2024 gave us an alarming picture of the vicious cycle the Indian economy is mired in. With relentless rise in domestic debt and consequently debt-servicing burden on the budget, the government must seek ways to increase revenue by taxing the rich. But the Modi government has brought down corporate tax rate to an all-time low and even though the government talks about better tax compliance, corporate tax proceeds in India are now less than personal income tax earnings. Even GST earnings are more than corporate tax proceeds and GST is most regressive with the bottom half contributing two-thirds of GST collection and the richest 10% accounting for only 3-4% of total GST income. According to Budget 2024 figures, personal income tax accounts for 30.91% of total tax revenue, followed by GST (27.65%) with corporate tax coming third (26.56%). Top 1% of Indians hold more than 40% wealth, it is high time India levied 2% wealth tax on the top 1% and spend the money to increase India's education and healthcare budgets. The Modi government follows the opposite direction - increase revenue by taxing the poor and the middle classes and keeping the budget deficit in check by reducing social sector and welfare spending. The ₹5,000 crore wedding celebration of the Ambani family gave us the truest picture of what the annual budget means in Modi's India - endless celebration of the ultra rich at the cost of the poor and the middle classes. India needs an urgent course correction to lift the people out of this morass.
