The Budget for 2023-24

• Shri P. Chidambaram & Prof. Gourav Vallabh

The Budget for 2023-24 and the Budget Speech of the Hon’ble Finance Minister show how far this government is removed from the people and their concerns about life, livelihood and the growing inequality between the rich and the poor.

Let me begin by pointing out, with regret, that the FM has not mentioned the words unemployment, poverty, inequality or equity anywhere in her speech. Mercifully, she has mentioned the word poor twice in her speech. I am sure the people of India will take note of who are in the concerns of the government and who are not. Let me turn to the numbers.

Last year, the government estimated the GDP for 2021-22 at Rs. 232,14,703 and, assuming a nominal growth rate of 11.1 per cent, projected the GDP for 2022-23 at Rs. 258,00,000 crores. The GDP for 2021-22 has been since revised upward to Rs. 236,64,637 crores. In today’s Budget papers, the GDP for 2022-23 has been estimated at Rs. 273,07,751 crores which yields a growth rate of 15.4 per cent, much above the earlier estimate. Given this impressive number, real GDP ought to have grown in double-digits. Yet the FM (and the Economic Survey) put the GDP growth at only 7 per cent this year. Will the government explain?

The claim of real GDP growth is in the face of lower capital expenditure. Please see the following numbers: 2022-23 BE RE Capital Expenditure 7,50,246 7,28,274 Grants for creation of Capital Assets 3,17,643 3,25,588 —————————————————————————————————— Effective Capital Expenditure 10,67,889 10,53,862 Please note that both Capital Expenditure of the central government and the Effective capital expenditure are lower than the Budget Estimates. So, what drove growth in 2022-23? We know that private investment is down, exports are down and private consumption is stagnant. So, how does the government explain the 7 per cent growth in the current year? Besides, in 2022-23, the growth rates in Q1 and Q2 have been estimated at 13.5 per cent and 6.3 per cent, respectively. So, we already have 9.9 per cent growth in the first half of the year. If the whole year will only yield 7 per cent, does that mean that Q3 and Q4 will record growth rates of only 4 to 4.5 per cent. For the whole year, therefore, quarterly GDP growth rate is sliding: 13.5, 6.3, 4.2 and 4.0 per cent. There are other numbers which are disconcerting: the lesson to be drawn is that the government is not spending what was promised on key schemes: 2022-23 BE RE
(in Rs. crore) Agriculture and Allied Activities 83,521 76,279 PM KISAN 68,000 60,000 Education 104,278 99,881 Health 86,606 76,351 Social Welfare 51,780 46,502
Urban Development 76,549 74,546 Umbrella Scheme for Development of SC 8,710 7,722
Development of ST 4,111 3,874 Development of Minorities 1,810 530 Development of Other Vulnerable Groups 1,931 1,921
Transfer to States 334,339 270,936

No taxes have been reduced except for the small number who have opted for the new tax regime. No indirect taxes have been reduced. There is no cut in the cruel and irrational GST rates. There is no reduction in the prices of petrol, diesel, cement, fertilizers etc. There is no cut in the numerous surcharges and cesses which are, anyway, not shared with the State governments. Who has benefited by this Budget? Certainly, not the poor. Not the youth looking desperately for jobs. Not those who have been laid off. Not the bulk of the taxpayers. Not the homemaker. Not the thinking Indians who are shocked by the growing inequality, the rise of the number of billionaires and the wealth being accumulated in the hands of the 1 per cent of the population. Certainly, not you.

This much is clear: The government is determined to push the fortunes of the GIFT city, Ahmedabad, at the cost of other commercial and financial centres. The government is also determined to push the ‘new tax regime’ for which there are few takers for a variety of reasons. Besides, making the ‘new tax regime’ the default option is grossly unfair and will rob the ordinary tax payer of the meagre social security that he may get under the old tax regime.

The Economic Survey listed all the headwinds that the world — and India — will face, but did not offer any solutions to face these headwinds. The Budget speech did not even acknowledge the headwinds. The government is living in its own imaginary world.

Three stark facts are acknowledged the world over:

1. World growth and world trade will slow down significantly in 2023 (for India, 2023-24).
2. Many advanced economies will go into a recession.
3. The global security situation, thanks to the Ukraine war, and other brewing conflicts, will deteriorate.

If all three materialized, what will the government do? What kind of burdens will that place on the people who are suffering owing to inflation and unemployment? There were no answers provided either in the Economic Survey or in the Budget Speech.

This is a callous Budget that has betrayed the hopes of the vast majority of the people.

On New Tax Regime - What proportion of tax payers have moved to the new tax regime. The Income Tax Department is expected to release basic data every year. The last data that is being released is only for assessment year, 2019-20. Why has the data not been released? How many people have switched over to the new tax regime? What about those who have not switched over to the new tax regime. Has it been Rs. 1 benefit for them?

First, the government must tell us how many of the middle-class tax payers have switched over to the new tax regime? The minor relief that has been given is only for those who have switched over to the new tax regime. For those who are in the old tax regime, there is no concession at all.

On GDP: The GDP growth is falling. It was 13.5 per cent in the first quarter, 6.3 per cent in the second quarter and according to their own number, the whole year will be 7 per cent, arithmetically, it works out only to another 8.2 per cent in two quarters, so I have divided it in the 4.2 and 4. You can divide into 4.1 and 4.1.

On Railways: Allocating more money for capital expenditure is good. Allocating more money for capital expenditure in railways is good, but, look at the records of this government, it allocates the money for capital expenditure, but, spends 22,000 crores less. Will they be able to spend the additional allocation, that is the question? And how many jobs in the railways are vacant? How many exams of railways have been canceled? So, allocating money is not equal to spending the money, nor is allocating money equal to creating jobs. It is only when you actually spend the money and fill the vacancies; your objectives will be achieved.

On Poverty: 5.6 crore people have fallen below the poverty line in the last three years, thanks to the pandemic and other reasons. Now assume that the poor will remain poor and one per cent of this country will accumulate the wealth that is an assumption which we reject as a cruel, cynical assumption. You have to reduce inequality; you have to ensure that the middle class grows; you have to ensure that more people below the poverty line go up the poverty line. Please read the Azim Premji University report. Crores of people have been pushed below the poverty line and whatever middle class there is, you are denying any relief to that middle class unless that middle class taxpayers move to the new tax regime and that is the paltry relief. If you do the calculations and that will burden the statement, you do the calculation, there is really no benefit except in the middle two slabs. There is really no benefit even under the new tax regime.

On MGNREGA: What was promised- a hundred days of employment a year. Now the economic survey says- the MGNREGA demand has increased. Over 6 crore households asked for work, only 5.7 crore households got work and the average number of days, they work is 42. So, we don’t have a full MGNREGA. We have got a less than a half MGNREGA. They don’t get work, all the households don’t get work and even the work they get is only 42 days a year and every state is saying that arrears of MGNREGA wages are due. So, actually MGNREGA is being squeezed from all sides. Don’t give work to everybody who demands. Don’t give him a hundred days’ work and hold back the wages. So, it’s being squeezed from all sides.

On Transferring fund to States- I don’t know what state got what. You have to look into it, but the fact is that in 2022-23, they promised to transfer Rs. 3,34,339 crores. They will transfer only Rs. 2,70,936 crores. What is the use of announcing packages, if money is not transferred? They have transferred, or they will transfer by 31st March of this year, Rs. 70,000 crores, less than what was promised. Now, this is the budget number, they can’t transfer anymore, because, once the budget is approved, they cannot transfer anything more than Rs. 2,70,936 crores. So, the state should be asking, where is the money that you promised us? You promised to transfer Rs. 3,34,000 crores, you are transferring only Rs. 2,70,000 crores that is the question which Chief Minister must ask and I hope they will.

Based on Press Briefing by Shri P. Chidambaram & Prof. Gourav Vallabh on February 1, 2023