26

Jul

Union Budget: Big Promises But Nothing Much  For Weaker Sections

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Prof Pradeep Mathur

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New Delhi | Friday | 26 July 2024

A closer look at the Union Budget 2024 makes it obvious that the Modi government which day and night says Sab ka sath sab ka vikas has done very little to address the needs of the poor and the weaker sections of society.

 

The budget does not provide sufficient relief for the underprivileged. Health and education, the two most essential areas for uplifting the disprivileged sections of society, have been given very little.   While there is an increase in health allocation, it remains at just 1.88% of GDP, and the education allocation, though increased, is only 3.07% of GDP. The budget allocation for health and education should be at least 4% and 6% of GDP, respectively. Then there is a drastic reduction in budgetary allocation for many schemes aimed at minorities. The Ministry of Minority Affairs (MoMA) received just 0.06% of the total budget. It should have been at least 1%  for minority welfare.

 

“The budget seems to benefit only one class of society. The budget’s favouritism towards the wealthy and big corporations is obvious because corporate tax revenue (17%) is less than income tax revenue (19%). In contrast, indirect taxes continue to burden the poor and middle class. The heavy subsidization of corporations under the new employment incentive scheme is also not good.

 

Article at a Glance
The Union Budget 2024 has failed to address the needs of the poor and weaker sections of society, contradicting the Modi government's slogan "Sab ka sath sab ka vikas". The budget allocation for health and education, crucial for the upliftment of the underprivileged, is insufficient, with only 1.88% and 3.07% of GDP, respectively.

The allocation for minority welfare has also been drastically reduced. The budget favors the wealthy and big corporations, with corporate tax revenue being less than income tax revenue.

To address economic disparities, the government should curb corruption, impose higher direct taxes on the wealthy, and reduce indirect taxes to fund social sector schemes. Additionally, the government should promote interest-free microfinance and banking to boost the economy and reduce social unrest.

 

 

Moreover, the budget is contractionary as we look to an expansionist approach to address issues of unemployment, inflation, and inequality. There is a negligible increase in expenditure in social sector allocations despite substantial revenue growth. Even the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme,  has not seen an increase despite high unemployment rates. Then cuts in food, fertilizer, and petroleum subsidies are difficult to understand.

 

The government should curb corruption, impose higher direct taxes on the wealthy, and reduce indirect taxes to fund social sector schemes. Special steps should be taken and policies framed for the welfare of Dalits, backward classes, SCs, STs, and minorities, particularly poor Muslims. Concrete plans and adequate budget allocations rather than symbolic gestures are the need of the hour to end economic disparities.

 

There is also the need to reduce dependence on debt and move towards an interest-free economy. About 19% of the budget has been allocated for interest payments. With borrowing and other liabilities, it accounts for nearly 27% of the budget.  The government should promote interest-free microfinance and banking on a large scale to boost the economy, generate employment, and reduce social unrest.

 

There are of course some positive points in the budget, such as adherence to fiscal prudence, assumed tax buoyancy, increased capital gains, and securities transaction taxes. These measures will stabilize asset prices and make our exports more competitive by reducing customs duties across several sectors. But in themselves, these measures are not sufficient to end the present economic crisis.

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